CHINA BECOMES NUMBER ONE IN AUTOMOBILE SALES IN THE WORLD!

OK, all their cars are the size of transistor radios, but still the sales for last month totaled over 1 million CHINESE vehicles .

The reason attributed to these sales results were that the government lowered TAXES on the autos and had less mandates as to their mileage performance and pollution controls. THEY WANTED CARS FOR PEOPLE TO AFFORD AND ENJOY.

Preliminary figures show auto sales in China reached about 1.03 million in March, exceeding U.S. sales for the third month in a row, state media reports said Wednesday.

Data from 14 major auto makers, accounting for roughly 90 percent of total sales, totaled 1.026 million, the Shanghai Securities News and other state-run newspapers said, citing Chen Bin, head of the Department of Industry at China's main economic planning agency.

Full industry data due to be released by the China Association of Automobile Manufacturers in coming days could push March auto sales in China, the world's second-largest auto market, to a monthly record, the reports said.

China's industry wide auto sales in March 2008 totaled 1.06 million, it said.

Americans bought 857,735 new vehicles in March, down 37 percent from the 1.36 million sold in the same month a year earlier, according to Autodata Corp.

But a 25 percent jump in U.S. sales from February raised hopes that the worst may be over for an industry battered by global economic malaise and financial catastrophe.

China is bound to eventually overtake the U.S. as the world's largest auto market, and recent developments have accelerated that trend, with Chinese vehicle sales in January and February exceeding U.S. monthly sales for the first time ever.

China's first-quarter sales may exceed those in the U.S., Chen told a shipbuilding conference in Beijing. Sales for the full year are forecast to exceed 10 million units for the first time ever.

With sales slumping elsewhere, China is one of the few bright spots for the ailing industry.

General Motors Corp. (GM) said Wednesday that it sold 137,004 vehicles in China in March, up 24.6 percent from a year earlier. Its mini vehicle joint venture, SAIC-GM-Wuling, saw sales surge 38 percent to 90,784 vehicles.

But China's promise is also a curse for automakers facing ever intensifying competition among both domestic and foreign manufacturers.

On Wednesday Stuttgart, Germany-based Daimler AG (DAI) was launching its Smart model in China - the 39th market for the two-seater mini car. Other automakers are also planning launches ahead of and during the April 20-28 Shanghai Auto Show.

"The confidence in China is back," said Klaus Maier, president and CEO of Daimler's Mercedes-Benz (China) Ltd.

While he said Mercedes expects double digit growth in China's luxury car segment, the industry focus now is mainly on smaller and more fuel-efficient vehicles likely to appeal to frugal families, rather than big sedans.

To help spur auto sales, the government halved taxes on purchases of small autos and is spending 5 billion yuan (about $730 million) on subsidies for purchases of light trucks and minivans in the countryside, where most of its 1.3 billion people live.

Those policies, part of a plan to boost 10 strategically vital industries singled out for special support, helped push China's vehicle sales up 25 percent in February from a year earlier.

But Zhang Xin, an analyst at Guotai Junan Securities, in Beijing, cautioned against reading too much into volatile monthly figures.

"Sales may be surpassing the U.S., but at the same time profits are being squeezed due to the lower prices of the smaller cars," Zhang said.