During the first 10 months of this year, China's auto sales, including cars, buses and trucks, rose by 64% from the previous year to 413,500. According to a report from the Commerce Ministry, sales from exported vehicles jumped 117% year-on-year to $4.8 billion.

Despite increased car sales overseas, China's revenues are falling, hurt by declining car prices. The report showed that exports of passenger car more than tripled, but the weak dollar made their value to rise only 174% to $948 million.

Among other things, "unhealthy competition" is blamed for this discrepancy between the export volume growth and sales. According to the official Xinhua News Agency, value of the foreign autos sold in China increased in the January-September period as passenger cars imports totaled only 99,500 units with a dollar value of $3.4 billion.


Looking ahead, the report estimates an increase of Chinese automakers in Europe and North America. China's vehicle exports are expected to rise to 600,000 in 2007 and to 800,000 in 2008. Some Chinese automakers also announced plans to develop new assembly plants in the Philippines or in central Mexico.

The weak dollar is not the only factor that could continue to lead to lower revenues for Chinese automakers. While the volume of cars being exported has been increasing, there are sure to be questions over the materials that are being used in these cars, and I would expect to see costs continue to rise as the automakers look to improve the materials being used in their vehicles.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.