BC-AS--China-Auto Sales, 1st Ld-Writethru,0628

China auto sales grow at slowest rate in 13 months

SHANGHAI (AP) -- The world's largest auto market cooled further in May, with sales of passenger cars in China growing 26 percent from the year before -- the slowest rate in over a year -- as demand for sedans weakened, an industry group reported Tuesday.

Automakers sold 1.04 million passenger cars in May, which was less than the month before when 1.1 million cars were sold, the quasi-official China Association of Automobile Manufacturers reported.

The 26 percent growth in May's passenger car sales compared with a 34 percent year-on-year increase in April and a 63 percent jump in March. May's increase was the weakest in 13 months.

Including all vehicles, sales climbed 28 percent from a year earlier to 1.42 million units. That was down 9.4 percent from the month before, the group reported.

Global automakers are looking to China, which last year overtook the United States as the biggest auto market by vehicles sold, to drive demand amid weak sales elsewhere. But China's sizzling growth in car sales was bound to slow on a year-earlier basis due to the rebound in auto sales by late spring last year, following a slump in late 2008 brought on by the global economic crisis.

The boom in Chinese auto sales initially was sparked by a government campaign to boost the industry through tax cuts and subsidies aimed mainly at boosting purchases of small, energy-efficient vehicles. But by earlier this year the growth appeared to be shifting to a broader base as some car owners traded up to better vehicles.

"The figures show sales are returning to a normal rate of increase now, which is exactly the right place for the market to go," said Zhang Xin, an auto analyst at Guotai Jun'an Securities, in Beijing.

Such growth is more sustainable and thus healthier in the long run, he said.

"I had worried that the unhealthy excess surge in sales could damage the industry," Zhang said.

Analysts say a variety of factors hit passenger car sales in May, including a national holiday, a strike at a parts maker that forced Japan's Honda Motor Co. to suspend production at four factories, and a slump in the stock market, which likely left many investors with little appetite for splurges on big-ticket items like cars.

For January through May, passenger car sales rose 55 percent to 5.7 million vehicles. Total vehicle sales rose 53 percent in January-May to 7.6 million.

In the largest segment of the passenger car market, sedans, May sales rose 22 percent from a year earlier to 720,100 vehicles, the association said. That represented a 5 percent decline from April.

But demand for sport-utility vehicles and commercial vehicles remained strong.

Sales of SUVs more than doubled to 103,100 while sales of multipurpose, or commercial vehicles, jumped 93 percent to 33,700 units, the report said.

Despite the trend toward more moderate demand, General Motors Co. and Ford Motor Co. reported double-digit growth in China sales in May and new monthly records.

GM reported last week that sales by the company and its local partners totaled 196,400 vehicles and those by its main Chinese joint venture, Shanghai GM, rose 48.7 percent from a year earlier to 83,302.

Ford said its China sales rose 17.8 percent over a year earlier to 23,742 vehicles. The company said it was the 16th straight monthly increase.

Chinese automakers are slower to report their monthly sales figures. However, Chery Automobile Co. and BYD Auto were the leading domestic manufacturers in April, with BYD's compact F3 the best-selling car for that month.

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Associated Press researcher Ji Chen contributed to this report.