TM Toyota Motor Corporation

SHANGHAI— Sales of new cars in China in January rose 9.3% from a year earlier, as demand increased in the run-up to the Lunar New Year holiday.

Sales of new cars—sedans, sport-utility vehicles and minivans—rose to 2.23 million vehicles in January, the government-backed China Association of Automobile Manufacturers said in a statement Friday. Total vehicle sales, including trucks and buses, rose 7.7% to 2.5 million.

The month leading up to the Lunar New Year holiday is typically the peak sales season for the car market, as Chinese consumers spend on big-ticket items like televisions, air-conditioners and automobiles. The Lunar New Year fell in early February this year.

"The growth was not bad for a market that sells more than 20 million cars a year," said Boni Sa, an analyst at consultancy IHS Automotive. "In the coming months, we think growth of new-car sales will likely moderate as China's weak economic situation may hurt consumer confidence," he said.

The Chinese car market has bounced back from a contraction in the summer of 2015, thanks to incentive programs from the central government, include a halving of the 10% purchase tax on small-engine cars.

IHS expects a 6.3% increase for China's new car sales this year. The manufacturers' association says passenger-car sales will grow 7.8% to 22.76 million this year.

In January, most car makers reported solid sales gains. Sales for General Motors Co. and its joint ventures in China rose 7.3% from a year earlier to about 421,000 vehicles. Volkswagen AG, which includes its namesake Volkswagen brand, luxury car maker Audi AG and sports car maker Porsche Group, sold 400,100 cars, up 14% from a year earlier. Toyota Motor Corp. posted a 32% rise for its China sales to 125,000 cars.

Nearly all car makers are increasing their investments in China, even as new-car sales growth has slowed to single digits from double-digit rates in the previous decade.

GM plans to introduce 13 new and refreshed models this year in China. Ford has said it would invest $1.8 billion through 2020 in China to cater to Chinese consumers' demand for greater smartphone connectivity and autonomous driving. Renault SA in January started building its Kadjar SUVs in China after more than a decade of selling its imported vehicles there.

In January, the crossover and SUV segment recorded strongest growth, up 61% from a year earlier. Sedan sales continued to suffer from rising demand for SUVs. They fell 9.1%.

Chinese car brands' share of the market rose to 45.5% in January from 42.4% a month earlier, while German brands rose to 20% from 15%, U.S. brands fell to 12.1% from 12.8% and Japanese brands dropped to 13.4% from 17.4%.

Rose Yu

(END) Dow Jones Newswires

February 19, 2016 00:55 ET (05:55 GMT)

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