Chinese auto market growth pace slows

China's automakers reported Monday that sales growth slowed 11.9 per cent in July from June, to 1.2 million vehicles.

The report by the state-sanctioned China Association of Automobile Manufacturers is a setback for big manufacturers, such as General Motors, which are hoping China will drive sales as demand weakens elsewhere.

Sales are forecast to grow by 20 per cent this year but that is down sharply from 2009's breakneck 45 per cent rise.

July sales were up by 14.4 per cent from the same month a year earlier but down from June's 19.4 per cent growth.

Automakers in China face rising costs and labour tensions, highlighted by recent strikes at parts suppliers affiliated with Honda Motor Co. and Toyota Motor Corp. that disrupted production.

China passed the United States last year as the biggest auto market on the strength of sales tax cuts, subsidies to rural buyers and incentives to encourage drivers to switch to cleaner vehicles.

The latest figures reflected the rapid decline in sales growth this year as the impact of government incentives faded.

In the first seven months of the year, sales rose 43.6 per cent from a year earlier to 10.3 million units, the association said.