Luxury Cars Lead First-Half Sales Spurt in China

Just the Facts:

• Car sales in China rose 5.3 percent in the first six months.
• Luxury European brands continued to enjoy healthy growth in the Chinese market.
• Ford outpaced GM's sales growth, but still lags in terms of overall volume in China.

SHANGHAI, China — Luxury European brands continued to enjoy healthy demand among affluent Chinese buyers, as first-half car sales in China rose 5.3 percent.

From January to June, China car sales totaled 6.64 million units, up 5.3 percent from a year earlier. Automakers sold 1.02 million vehicles in June, an increase of 3.5 percent from the previous year, according to the China Passenger Car Association.

The sales pace increased slightly in June, from May and April, due in part to the recovery of Japanese brands from the devastating earthquake and tsunami earlier this year. But Chinese industry analysts cautioned that consumer sentiment remains weak.

Most carmakers have reported slower sales growth this year after the government phased out incentives on fuel-efficient vehicles and some cities restricted car license plates to address traffic congestion.

Bucking that trend are a number of European manufacturers and brands.

Sales of Mercedes-Benz, Smart and Maybach jumped 59 percent year over year to hit a record 95,030 units during the first six months.

First-half sales of BMW and Mini models in China rose 61 percent to 121,614 vehicles, while Audi moved 141,000 cars, but saw slower sales growth of 28 percent due to limits on local production.

Among domestic brands in the first half, China's largest auto group SAIC posted a 13-percent year-on-year sales increase to 2 million units. SAIC's partner General Motors played a significant role in that performance, reporting a record 1.27 million sales in the first six months.

Inside Line says: Analysts see sales growth in China continuing to flatten through the rest of the year.