China auto market

A worker on a production line of sedans at an auto factory of China's First Automotive Works Group Corporation in Changchun, northeast China's Jilin province.(AP Photo/Color China Photo, File)

Car sales in China have surpassed those in the United States for the month of January. However this is considered an anomaly due mainly to the global credit crunch and corrections in the US market. Data released Tuesday by the China Association of Automobile Manufacturers shows 735,000 new cars were sold in China last month, down 14.4 percent from the record of 860,000 set in January 2008. U.S. sales, meanwhile, fell 37 percent to 656,976 vehicles — a 26-year low.

Associated Press
Dan Strumpf and Elaine Kurtenbach

"China has the potential very easily to become the largest car market in the world," said Tom Wilkinson, a spokesman for General Motors Corp., but "it was probably a bit of an aberration in January."

"Right now, with the U.S. in correction mode, we're going to get these kinds of anomalies," said Rebecca Lindland, auto analyst for IHS Global Insight. "We could get them throughout the course of this year and throughout next year if we don't get an economic recovery."

If American car demand revives in coming months, the U.S. likely will remain ahead in annual sales — at least for another year. IHS Global Insight still predicts 2009 sales in China of between 9 million and 9.5 million, and U.S. sales of 10.5 million. China's vehicle market has grown dramatically in recent years, overtaking Japan in 2006 to become the world's second-largest by annual sales. With 1.3 billion people, China may inevitably leapfrog the U.S., with a population of 300 million, into the No. 1 spot, but that moment may still be many years away, Lindland said.

China's best-selling automakers are GM and Germany's Volkswagen AG, but its own ambitious producers, such as Chery Automobile Co., are growing fast. To spur the slowing auto market, the Chinese government has rolled out measures to help boost vehicle sales as part of a multibillion-dollar economic stimulus package while it also tries to promote cleaner, more energy-efficient engines.

The sales tax on cars with engines less than 1.6 liters has been cut by half to 5 percent through the end of the year. The government also is spending 5 billion yuan (about $730 million) on subsidies to farmers to replace three-wheeled vehicles or outdated trucks with small, 1.3-liter-or-less vehicles. Another 10 billion yuan ($1.5 billion) is going into upgrading automakers' technology and developing alternative energy vehicles.