March purchases accelerate driven by demand for entry-level models

China's passenger vehicle sales returned to high-speed growth in March due to surging demand for entry-level cars, as well as the flurry of new models launched in the spring, the China Passenger Car Association said on Tuesday.

The total sales of passenger cars, sport-utility vehicles, multi-purpose vehicles and minivans jumped 15 percent year-on-year to 1,459,095 units in March, the third-highest monthly growth in a year, the association said.

The strong performance in March boosted first-quarter domestic passenger vehicle sales to 4.21 million units, up 19.2 percent year-on-year.

"Usually, automakers prefer to debut new or updated models in March and April. That way, they can use the Spring Festival holidays to prepare for the new product launches," said Rao Da, secretary-general of the association.

"Also, the demand for passenger cars for family use on free-toll expressway trips during the three-day Tomb Sweeping Festival holidays also spurred sales. We saw higher growth in the entry-level segment," he added.

Rao also predicted robust growth in April as the Shanghai International Auto Show, which will start on April 21, will further boost consumption enthusiasm with new models expected to be launched by nearly all the brands.

"If the government doesn't implement measures to curb growth in the automotive industry, which has brought high pressure to traffic and the environment, passenger vehicle sales, excluding minivans, will surpass 1.2 million units in April," Rao said.

In 2010, China had 90 million vehicles on its roads, and the figure surged to more than 120 million by the end of last year, according to the association.

Rao said that the number of cars is expected to be between 260 and 330 million in 2020, with 70 percent of the vehicles in cities.

"Take Beijing as an example. In four to seven years, the capital will face serious traffic jams, which will have a heavy impact on employees' efficiency and economic development," he said.

Rao suggested that the government launch a fuel tax this year and gradually increase it over the next few years, to curb inflation and negative growth in the auto market in the short term.

Gary Smyth, executive director of General Motors' global R&D laboratories, also discussed his worries about China's energy and environmental challenges at the China Automotive Energy Forum on Tuesday.

"General Motors expects the number of vehicles on China's roads to surpass that in the United States and Europe by the end of this decade," he said. "We are committed to reinforce the development of advanced propulsion technologies and electrification solutions in China, to help reduce the petroleum consumption, lower tailpipe and carbon dioxide emissions from vehicles, and create a more sustainable energy model here."

He said that the government should gradually scrap outdated diesel-powered vehicles, which contributed 97 percent of the emissions among all kinds of vehicles.

Smyth added that GM is also working on personal mobility solutions for mega-cities to address urban congestion issues.

The company has signed a memorandum of understanding with Sino-Singaporean Tianjin Eco-City Investment and Development Co and the Tianjin Eco-City Administrative Committee to collaborate on a two-year pilot program that will study the feasibility of using electric networked-vehicles in the Tianjin Eco-City area.

Last week, the US automaker posted record sales in China in March and in the first quarter.

GM's sales increased 12.6 percent year-on-year to 290,538 units last month, the second-highest monthly sales total in the company's history in China. That helped its domestic sales in the first quarter grow to 816,373 units, up 9.6 percent from the same period last year.

Another US automaker, Ford Motor Co, also posted record-high sales in March and in the first quarter. Ford's sales of 81,387 units represented a 65 percent surge year-on-year.

The company attributed the growth to new product launches in the first quarter, including three new SUV models.