Oh May! China's Car Sales Up 55 Percent

From early indications, we assumed that May car sales would be great in China. Yet, we admit being kept speechless by the news that China’s car sales rocketed up 55 percent in May. That’s the most since the beginning of this year, data from China Passenger Car Association shows. And it’s the biggest growth China has seen in a long time.

According to Gasgoo, sales of passenger cars, multipurpose vehicles, sport utility vehicles and minivans (that’s as close to the “Light Vehicle” count they can get in China—pickups aren’t counted) rose to 812,178 units in May, up 54.7 percent from a year earlier. Vehicle sales in the first five months climbed 29.6 percent to 3.65 million units.

China clearly escapes the carpocalypse at thundering speed. Even in its darkest period, 2008, Chinese auto makers edged out a 6.7 percent rise, after a 22 percent rise the year before. China is solidly back in double digits growth territory, and from all accounts, 2009 should become its best year ever.

China’s sales usually are highest during the spring festival (which was in January this year), then trend down until July, then up again. Seasonally adjusted, the numbers are even more mind-blowing.

“While auto inventories in the U.S. and Western Europe are the among the highest they have ever been, Chinese inventories last month fell to their lowest in history,” Barron’s says. “In many regions of China, new-car buyers face long waiting periods.”

Barron’s explains the boom this way: “China’s latest car boom follows Beijing’s massive fiscal-stimulus plan, which included a support package for the domestic auto industry, cutting purchase taxes for cars with small engines (with displacement below 1.6 liters) and providing subsidies to rural purchasers. The government has vowed to boost nationwide vehicle sales 10 percent annually for three more years and is trying to cut the number of car makers to ease competition.”

We say that the stimulus package is frugal compared to what other governments dump into their car industries. China’s rocket has just begun to lift off and is on a long trajectory. China being the world’s largest car market in 2009—and possibly for years to come—is practically a given.