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. Last Updated: 07/27/2016

China's Car Sales Top 1 Million for First Time

SHANGHAI, China -- Car sales in China have topped 1 million per year for the first time, driven by soaring demand from the increasingly wealthy middle classes and growing availability of cheaper models.

China, one of the world's fastest-growing markets, is swiftly becoming the strategic focus of most of the world's top car makers, including Japan's Toyota, Nissan and Honda, which have announced plans this year to build car plants in the country worth hundreds of millions of dollars.

An official at the China Association of Automobile Manufacturers said 1.02 million cars were sold in China in the first 11 months of this year, representing a 55.4 percent jump from the same period in 2001.

Private buyers were responsible for much of the rise in sales as steady economic growth of about 8 percent lined the pockets of Chinese families and put an unprecedented range of economy cars within their reach.

Rapidly expanding cities also encouraged citizens to get behind the wheel and demand for cars was one of the top reasons for surging retail sales that grew 9.1 percent in November from the same month last year.

"China has a dramatic chance in the future. The middle class at the moment is only 5 percent of the population," said Peter Wolters, a China-based executive for market leader Volkswagen. That compares with 50 percent in some developed countries.

"This is the same development that Europe and the USA had already gone through some years ago, and what makes China so attractive is that we are at the beginning of the development," Wolters said.

China is expected to become the world's fourth-largest vehicle market next year, General Motors said in early December. China has already toppled Germany from number three spot for monthly vehicles sales, GM said. For passenger cars, it rivals South Korea as Asia's second-largest market after Japan.

China's car industry has blossomed from producing just 8,825 cars in 1985 -- when Volkswagen became the first foreign car to enter the China market -- to output of 974,000 in the first 11 months of 2002, a 51.4 percent rise year on year.

But while demand is expected to climb steadily, industry experts said this year's breakneck sales pace has to slow. "Competition will intensify next year as more new models are pushed to the market. Sales growth may slow as some pent-up demand was satisfied this year," said Haitong Securities analyst Gu Qing, forecasting 30 percent growth next year.

China Southern Securities analyst Xu Xiang said he expected 30 new car models to hit the China market next year, with most focused in the economy to medium-end segment $12,000 to $24,000.