China auto market the largest in the world

US Auto Market

The US auto-making industry took a big hit during the financial crisis, prompting Washington to establish the "cash for clunkers" scheme that saved the sector from going under. However, it wasn't enough to prevent America being overtaken as the world's largest producer of vehicles in 2009.

China sold more than 13.5 million vehicles in 2009, the official Xinhua news agency said today, overtaking the United States to become the world's largest auto market as the communist government's own stimulus policy spurred demand after the financial crisis hit.

New car sales in the US fell more than 20 percent in 2009 to a 27-year low of 10.43 million vehicles, and China's own figures came well above the 10 million in vehicle sales that Beijing had originally targeted for 2009.

Turnaround in the auto industry

The news signals a huge turnaround in the global auto industry that has been led by the Big Three Detroit companies since Ford introduced the world's first conveyor belt system in 1913. The market also shrank due to production cutbacks at General Motors Co. and Chrysler Group LLC following their filing for Chapter 11 bankruptcy protection earlier in the year.

In 2009 Toyota outsold GM in the US market for the first time, excluding fleet sales, with retail sales of around 1.61 million cars, while third-ranked Ford saw its US sales fall 15.3 percent to 1.62 million units.

But it also reflects a similar global trend across all sectors as US dominance has slid downwards after its banks kick-started a world-wide recession at the end of 2007.

Industry observers attributed China's strong auto sales largely to government policy initiatives, which had effectively lifted market sentiment and attracted buyers back to showrooms, as reported by Reuters.

Bleak global economy

A low comparative base in 2008, when car sales growth slowed to a single-digit rate for the first time in at least 10 years, also helped inflate the 2009 rate.

Much to the frustration of Washington, China has remained a bright spot in an otherwise bleak global economy amid recession and has surprisingly become a safe haven for the very US car-makers it made pay in 2009, such as GM and Ford Motor.

America's domestic car industry is expected to recover slowly in 2010 with the help of further assistance from President Obama's administration.

Related Articles:

Ford profits | Yahoo Profits | New year, new hope

Like this article? Get the RSS feed: