BEIJING - Car sales in China rose 6.5 percent to 1.35 million units in March, recovering from the lowest growth rate in two years in February but still well below the hectic pace seen last year.
The world's top auto market has lost some of its steam after years of rapid expansion and a major rebound is unlikely in the coming months now that the government has taken back its policy incentives which had helped elevate the country to the world's top auto market in 2009.
"The mini van segment was affected the most after the subsidies were taken away at the end of 2010. I am not expecting a rebound in the near term as there are lot of mini vehicles out there already after two consecutive years of strong sales," said Jenny Gu, an analyst with J.D. Power and Associates.
Steps by local governments to restrict car sales in major cities, such as Beijing, to ease ever-worsening traffic gridlock also curb auto demand in a country whose per capita car ownership is still far below developed markets.
A few pessimists, such as Rao Da, head of the semi-official China Passenger Car Association, have even projected a more than 10 percent fall of auto sales for the full year.
Data provided by the China Association of Automobile Manufacturers (CAAM) on Sunday showed a total of 1.35 million sedans, sport utility vehicles and multi-purpose vehicles were sold in March nationwide.
That was a rebound of 39 percent from the 967,200 units sold in February, when sales climbed only 2.6 percent in what was the slowest growth for almost two years, partly due to a demand lull during the Lunar New Year holidays.
The data also showed that for the first quarter, car sales rose 9.1 percent over the same year-ago period at 3.84 million units, a pace sharply off the heady growth of 76 percent recorded in the first quarter of 2010.
In the United States, sales of most major automakers raced past expectations in March as buyers flocked to smaller, more fuel-efficient cars in response to rising gasoline prices.
But monthly vehicle sales fell by more than a third from year-ago in Japan in the wake of a devastating earthquake, tsunami and a still unravelling nuclear crisis.
Japan's troubles are also having a ripple effect in China, where Mazda Motor and Honda Motor both reported a decline in March auto sales.
Toyota, however, is unaffected with a 37.4 percent year-on-year rise of its monthly tally, rebounding sharply from a 2.8 percent slip in February.
Also gaining momentum in China is number two US auto maker Ford Motor with a 20 percent advance, leading rival General Motors which had flat sales in March.
Warren Buffett-backed Chinese carmaker BYD remained the biggest loser among major domestic brands despite a massive price cut earlier in the year.
Xiong Chuanlin, deputy secretary general of CAAM warned of more price cuts down the road as many industry players had set very ambitious annual target at the beginning of the year.