China boosted by strong car sales Amid the gloom of China's slowing growth, one bright spot has been sales of passenger cars, which have been booming in spite of the broader slowdown. Car sales to dealerships in the country rose 7.1 per cent in the first half, compared with the same period last year, according to data released on Wednesday by the China Association of Automobile Manufacturers. This means the sector has outpaced growth in key industrial sectors such as electricity production - up 5.8 per cent in the first five months of the year - or steel output - up 2 per cent in the first six months. In June, car sales to dealerships were up 15.8 per cent from the previous year, reaching 1.28m cars. They rose 22.6 per cent in May year-on-year. Although China's slowing economic growth and cooling construction sector has had a big impact in sectors such as raw materials and heavy machinery in the past several months, analysts say strong car sales point to the resilience of Chinese consumers and the economic power of China's urbanisation trend. However, the CAAM also acknowledged in a press conference that inventories at car dealerships were rising. Because its monthly sales data reflect sales to dealerships, not end-customers, the strong growth figures do not directly correlate to end-user demand. "The inventory pressure is definitely larger than before," said Dong Yang, director of the CAAM. As the economy slows down, pressure on producers and dealers has been growing. Nevertheless, the CAAM said it expected the Chinese car market - the biggest in the world - to stay strong for the rest of the year with overall annual growth of 5-8 per cent. General Motors, the biggest car seller in China, posted June sales up 10 per cent year-on-year; Ford's June sales rose 18 per cent year-on-year; and BMW reported deliveries up 13 per cent from the previous year. Separate data released on Wednesday, by the China Passenger Car Association, suggested slightly slower growth, with June car sales to end-users up 12.4 per cent from the previous year. Most analysts agree that car sales will continue to grow this year, and are set to receive a boost from China's recent fuel price cuts. Furthermore, the growing number of cities that restrict licence plate issuances is prompting some drivers to rush to buy a car before expected licence plate restrictions are imposed in their city. Yale Zhang, head of Shanghai-based consulting company Automotive Foresight, said: "Right now auto sales, particularly passenger car sales, are pretty good given the current economic situation. I'd expect 8 or 9 per cent growth in passenger car sales this year. Additional reporting by Gwen Chen in Beijing