A down-shift in China's auto sales

The BYD F6, from the the Shenzhen-based automotive company BYD, is displayed at a dealership in Zhengzhou city, central Chinas Henan province, in this March 2011 file photo.
AP Photo/Ma jian

The Detroit Auto Show opens to the public today, amid glowing reviews from car critics not seen in years and an air of excitement around a range of shiny new models. Finally, the gloom of 2008's "Big Three" meltdown is in the industry's rear-view mirror, with U.S. auto sales rising 10 percent in 2011, to sell 12.8 million vehicles.

It's the opposite story in the world's biggest auto market, China. For years, eager Chinese car buyers boosted vehicle sales records, making China the financial savior to global automakers. Dealers would tell stories of seemingly ordinary folk who would walk onto a lot armed with stacks of cash to buy a car, driving it away minutes later.

Now, it's a different story: New car sales rose just 2.5 percent last year, compared to a 46 percent rise in 2009 and 32 percent in 2010. China is still the world's biggest auto market, but for the first time in 14 years, the U.S. has overtaken China in total market growth.

Chinese consumers are staying away from car dealerships in part because it's tough to register for a license plate in many of China's biggest cities. In a bid to cut down on pollution and congestion, both Shanghai and Beijing force first-time car owners to first "win" a license plate in an overcrowded monthly lottery. Last year in Beijing, just 240,000 license plates were given away in a city of almost 20 million people.

China's central government has also ended the majority of stimulus programs that used to make the purchase of a car possible for many in poor, rural areas. According to China's state-run media, new tax incentives might soon be introduced to convince current car owners to purchase new models, but that's still a rumor.

Only luxury automakers still seem to be enjoying their ride in China. Rolls Royce now sells 30 percent of its cars in China, even though import taxes and duties make their vehicles twice as expensive as they are in the U.S.