China’s car sales and output edged up in July from one year earlier despite the weak selling season, signaling a mild rebound may come in the second half of the year.

Auto sales in China climbed 2.18 percent year-on-year to reach 1.28 million units in July, according to the China Association of Automobile Manufacturers (CAAM).

The country produced 1.31 million cars in July, up 1.26 percent from one year earlier, the CAAM said.

The country’s July car sales and output were down 11.19 percent and 6.96 percent month-on-month, the CAAM data indicated.

In June, the nation’s auto sales and output saw its first increase after two consecutive months of decline.

For the first seven months, the combined auto sales topped 10.6 million units, a rise of 3.22 percent year-on-year, while the output reached 10.46 million, up 2.33 percent from the previous year.

The country’s auto market boomed for the past few years but started to cool after the government removed tax incentives for the industry and several cities have tightened automobile purchase policies in an effort to combat traffic jams.

The government slashed its car-purchase tax for small-engine vehicles from 10 percent to 5 percent in 2009. The same tax was raised slightly to 7.5 percent in 2010, but this policy was discontinued at the end of the year.

To tackle the traffic gridlock, Beijing created a car-quota system on January 1, allowing only 240,000 new cars to be registered in the city this year. Last year saw the registration of 800,000 new vehicles in the city.

However, some industry insiders expect the growth rate of China’s auto sector will quicken in the second half of the year.

The July data indicated auto sales in the world’s largest car market is likely to trend up, despite the fact that the country’s car sales and output slowed from last month, analysts said, adding that car makers usually cut production in July, the weakest selling season during the year.

“The government may implement favorable policies to boost the auto market and ensure sound development after the industry’s growth rates slowed in the first half of the year,” said Yu Tiantian, a researcher with Jilin North Automobile Industry Information Development Co while attending the eighth China Changchun Automobile Expo in July. “The government is studying new polices to boost auto consumption.”

Dong Yang, secretary-general of the CAAM, last month said auto sales in the second half of the year will be significantly higher than those of the first half, with annual auto sales expected to grow by 5 percent.

Furthermore, September and October are usually the peak time for the car market, when sales normally dwarf other months.

China’s auto sales surged more than 32 percent year-on-year to hit 18.06 million vehicles last year, making the country the world’s largest auto market for the second year in a row. Last year’s automobile output hit 18.26 million vehicles, an annual increase of 32.44 percent.

Via: ChinaDaily.