Price discounts boost automobile sales in August

China's passenger car sales grew at a faster pace for a third straight month in August after manufacturers cut prices to attract customers. Deliveries of cars including multi-purpose and sport-utility vehicles to dealerships rose 7.3 per cent from a year earlier to 1.1 million units last month, the China Association of Automobile Manufacturers said yesterday in a statement. Sales rose 6.7 per cent in July and 6.2 per cent in June. They had fallen in May after Japanese automakers cut production in the aftermath of the March 11 earthquake. General Motors (GM) and its Japanese rivals Honda and Toyota introduced price discounts to offset slowing sales in the world's largest vehicle market, according to GM and J.D. Power & Associates. Kia, Volkswagen, and Peugeot are also introducing new models and revamping older ones to lure first-time buyers, said Klaus Paur, managing director at Synovate Motoresearch. "All the car manufacturers are active in bringing new models in the market to complete their product range, and at the point of sale and dealership level, there is also price discounting," Shanghai-based Paur said before the announcement. Total vehicle sales rose 4.2 per cent in August to 1.38 million units, according to the auto group. In the first eight months of the year, overall sales expanded 3.3 per cent to 12 million units, with passenger-car sales gaining 6.1 per cent to 9.2 million units. Vehicle sales in China are forecast to slow this year from the 32 per cent growth rate in 2010, after the government removed sales-tax breaks and rebates for rural buyers in January. Auto demand also waned after the central bank raised interest rates five times since October and ordered lenders to set aside a record amount as reserves, according to industry analyst Dunne & Co. Sales at SAIC-GM-Wuling Automotive Co, GM's minivan venture with SAIC Motor, showed the biggest growth last month, the carmaker association said in the statement. SAIC-GM-Wuling introduced discounts for its minivans starting May and also rolled out a new China-only sedan, the Baojun 630, to cater to entry-level buyers in August. GM, the biggest overseas carmaker in China, said that August sales rose 13 per cent to 205,885. Toyota, Nissan and other Japanese automakers are working to make up for lost output after the earthquake and tsunami. Japanese automakers offered incentives starting in July after losing market share in the second quarter, Marvin Zhu, a J.D. Power analyst, said.