Both vehicle production and sales in China posted buoyant growth last month from a year ago, helped by robust passenger vehicle demand, according to an industry organization.

The nation's January vehicle output jumped by 28.24 per cent year-on-year to 521,600 units, statistics released yesterday from China Association of Automobile Manufacturers showed.

Sales of domestic vehicles amounted to 530,100 units last month, up 44.62 per cent.

However, the output and sales declined by 7.15 per cent and 14.60 per cent respectively when compared to last December.

Sales of passenger vehicles, including cars, sport utility vehicles, multi-purpose vehicles and mini vans, surged by 72.63 per cent to 418,900 units in January from the same period last year.

Major Chinese car brands outpaced the overall passenger vehicle sales growth, showing a much stronger momentum.

Chery Automobile in Anhui Province said that its sales rocketed by 110.8 per cent year-on-year to 22,505 units last month.

Geely Automobile in East China's Zhejiang Province said that it sold 20,282 vehicles in January, up 96.13 per cent.

Meanwhile, however, both production and sales of commercial vehicles - trucks and buses - dipped from a year earlier.

Commercial vehicle output and sales stood at 130,000 units and 111,100 units last month, down 12.76 per cent and 10.27 per cent.

Zhu Yiping, a spokesperson of the auto association, predicted that full-year sales of made-in-China vehicles would grow by 10 to 15 per cent to around 6.5 million units in 2006 from last year.

In 2005, domestically-built vehicle sales grew by 13.54 per cent from 2004.

Song Bingshen, an auto analyst with Beijing-based China Securities Co Ltd, said growth of China's vehicle demand this year would not accelerate more than 2005's rate because major negative factors would persist, such as high fuel prices and poor traffic conditions in big cities.

Despite the expected growth, Song said price battles in the car market would continue to erode profits of China's auto sector this year.

"But profits will tumble at a slower pace this year than last year as a result of weakening cost pressures, such as falling steel prices," he told China Daily.

The auto association's statistics showed that the sector reported 52.6 billion yuan (US$6.5 billion) in total profits last year, down 24.3 per cent from 2004.

The auto manufacturing segment's profits plunged by 34.9 per cent to 23.7 billion yuan (US$2.9 billion) last year.

Combined sales of the top five Chinese automakers First Automotive Works Corp, Shanghai Automotive Industry Corp, Chang'an Motor Corp, Dongfeng Motor Corp and Beijing Automotive Industry Corp reached 360,000 automobiles in January this year, accounting for 67.9 per cent of the nation's total domestic vehicle sales, according to statistics.

The ratio was up 1 per cent from last year.

Source: China Daily