Chinese auto sales surpass the U.S. in first half of 2009

According to the China Association of Automobile Manufacturers, Chinese auto sales in June, including buses and trucks, increased 36 percent from a year ago -- checking in at 1.14 million, second only to April's 1.15 million.

In June, Chinese motorists purchased 872,900 cars, SUVs, and other passenger vehicles -- which was an increase of 48 percent in the light vehicle category. Total sales for the first half of the year increased 6.1 million, up 17.7 percent from a year ago. In the United States, passenger car sales during the same period dropped to 4.8 million, thanks to the economic climate.

Overall, global automakers are looking to China in order to help drive revenues as North American demand wanes. The problem is that the results in China are the exception to the rule, as other markets are struggling as well. This wasn't the case in late 2008, as China's auto sales weakened -- but this came to an end when the country launched a stimulus package with sales tax cuts, subsidies for trade-ins, and other incentives. It is this recovery that has automakers hoping that China will help fuel revenues as North America and other markets falter.

Thanks to its population, it is expected that China will overtake the U.S. as the largest vehicle market. And this transition is occurring rather quickly, due to the global economic downturn. According to analysts, China's auto sales should top 10 million vehicles. One group even expects the total to come in higher than 11 million.

In the United States, experts calculated June's sales to a 9.7-million vehicle rate for 2009 -- a far cry from 2007's 16 million vehicles sold. There are those who argue these numbers are misleading, as commercial vehicles have a much larger market in China than in the U.S.

According to General Motors (GMGMQ), its first half sales increased 38 percent this year compared to a year ago, and Ford (F) saw its sales increase 14 percent.

What does this data mean for the U.S. auto sector? First, the Chinese government was proactive in trying to jump start its automotive sales -- can we do the same? Yes, we have the cash-for-clunkers program -- which is a $4,500 tax credit for qualifying vehicles (and the list is strict). I don't think this program alone will be enough to jump start sales, there will have to be other incentives -- so let's be patient and see what comes up. The problem is that the auto industry in the U.S. may not have the time to be patient.

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