China surged past Japan to become the world’s No. 2 vehicle market after the United States last year as car purchases by newly affluent drivers jumped 37 per cent, the Chinese auto industry association said Thursday.

The announcement highlighted China’s lightning evolution from a “bicycle kingdom” into a major auto market where foreign producers are racing to open factories and target a growing urban middle class.

China’s overall vehicle sales, including trucks and buses, rose 25.1 per cent to 7.2 million units last year, the China Association of Automobile Manufacturers said. Passenger car sales rose to 3.8 million, it said.

Japan’s total vehicle sales last year came to 5.7 million units, a slight decline from 2005, said the Japan Automobile Manufacturers Association.

U.S. car and truck sales totalled 16.5 million units last year, down a bit from 2005, according to research firm Autodata Inc.

China’s auto exports hit a record high of 340,000 units in 2006, more than double that of 2005.

Customs statistics show that China’s vehicle exports surged 120 percent from 78,000 units in 2004 to 173,000 units in 2005, with export volume hitting $1.58 billion.

China is aiming to increase its vehicle and auto parts exports to $120 billion, or 10 percent of the world’s total vehicle trading volume, in the next 10 years.

Meanwhile, U.S. automakers, such as GM and Ford, after years of competition with Japanese giants Honda and Toyota, face the prospects of confronting China’s burgeoning manufacturing and export might in markets around the world.

 

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