China’s vehicle sales grew at a slower pace for the first half of this year as increasing fuel costs and inflation running at a 12-year record high deterred new car buyers.

Vehicle sales expanded by 18.5 percent to 5.18 million units from January to June from a year earlier, the China Association of Automobile Manufacturers said in a report yesterday.

The growth is 4.78 percentage points slower than the same period last year.

Half-year production also increased by 16.7 percent to 5.19 million units compared to 22 percent a year earlier.

The country sold 3.61 million passenger vehicles for the first six months, representing a growth of 17.07 percent over the same period in 2007.

"The cooling market is within our expectations due largely to the slowing in gross domestic product and a higher consumer price index which curbs purchasing power," said Wang Liusheng, an auto analyst from China Merchants Securities Co Ltd.

"We do not see the market rebounding at a faster rate in the second half with a potential fuel price increase and a reduction in car purchases by government," he added.

Other analysts believed that the declining car prices have triggered a wait-and-see attitude among car buyers at a time when a gloomy stock market has trimmed budgets.

China earlier expected vehicle sales would reach 10 million units this ye ar, up from 8.79 million last year, a low market penetration at the current stage.

Although the sales growth slowed, China remains one of the world’ s fastest developing markets, boosting overseas car makers’ sales.