China’s passenger-vehicle market had its strongest start since 2010, while sales in India shrank for a third month, illustrating the contrast in automobile demand in the world’s two most populous nations.

China’s wholesale deliveries of cars, multipurpose and sport-utility vehicles, rose 20 percent to 2.84 million units in January and February, according to the China Association of Automobile Manufacturers. India’s passenger vehicle deliveries in the same period fell 11 percent to 468,914 units, according to the Society of Indian Automobile Manufacturers.

Car sales in China and India, where one in three people in the world live, are diverging. Ford Motor Co. and Hyundai Motor Co., which reported deliveries in China surged more than 40 percent during the first two months, introduced new variants and offered discounts helping the car market buck the slowing growth seen in overall Chinese retail sales and industrial output. In India, the two automakers posted declines in sales. 

“The numbers reconfirm that India is still a minor operation in the global scheme of things, whereas earnings for companies are very dependent on China,” said Ashvin Chotai, managing director of Intelligence Automotive Asia in London. “The only similarity between India and China are their large populations.”

While sales in the world’s biggest car market fell last month because of the Lunar New Year holidays, they beat the average estimate of five analysts surveyed by Bloomberg by 11 percent.

General Motors Co.’s China sales rose 7.9 percent to 525,835 vehicles during January and February, widening its lead over Toyota Motor Corp. in the country. 

Toyota, Nissan Motor Co. and Honda Motor Co. reported declines in January-to-February sales, as Japanese auto brands continued to struggle with a consumer backlash sparked by a territorial dispute over a group of disputed islands.

Volkswagen AG ‘s Audi, the top-selling luxury brand in China, said its China sales rose 16 percent in the first two months. Daimler AG’s Mercedes-Benz said its January-February sales in China and Hong Kong fell 39 percent from a year earlier to 26,829 vehicles.

German brands gained market share in China in February, accounting for 20 percent of passenger-vehicle sales last month, followed by American, Japanese and South Korean nameplates, according to Chen Shihua, head of statistics at the auto association.

Local brands remain weak and cars sold by these companies are mainly low-priced, FAW Group Chairman Xu Jianyi said at a meeting of the National People’s Congress in Beijing on Mar. 6.

Li Weidou, head of export and import business at state- owned China FAW Group Corp., said last week that the government should order foreign automakers to contribute more to develop local brands and limit those whose sole aim is to win more sales in the country.

The auto industry may face increasing restrictions in China as the central and provincial governments step up efforts to deal with air pollution and traffic congestion.

Pollution has become a focus of the two-week session of the National People’s Congress now under way in Beijing, with Premier Wen Jiabao saying March 5 the country must balance economic development with environmental protection. State media have criticized the government this year for failing to sufficiently address the problem of tainted soil, air and water.
Demand for vehicle license plates in Shanghai still outstrips supply despite auction prices exceeding 80,000 yuan ($12,865), which are “too expensive,” Shanghai Party Chief Han Zheng said at the People’s Congress. 

(Bloomberg)