China car sales in June rise for the first time in over a year due to discounts, association says
- Retail sales of sedans, sport utility vehicles, minivans and multipurpose vehicles rose 4.9 per cent to 1.8 million units in June from a year earlier
- Prices cut by as much as 50 per cent, according to local media reports, to clear inventories of cars that do not meet new stricter emission standards
China’s car sales showed signs of recovery in June with a first increase since May 2018 as dealers offered discounts to clear inventory before the implementation of new emissions rules.
Retail sales of sedans, sport utility vehicles, minivans and multipurpose vehicles rose 4.9 per cent to 1.8 million units in June from a year earlier in the world’s biggest market, according to preliminary numbers from the China Passenger Car Association on Monday.
The report offers some hope for car makers and dealers struggling with the first slump in demand in a generation, caused by slowing economic growth, rising trade tensions and stricter emissions rules.
But a sustained recovery is far from certain, with researcher LMC Automotive in June estimating a decline of about 5 per cent for the full year.
While the June data is “inspiring,” it is inflated by discounting and it will not be easy for the market to keep up the growth, said Cui Dongshu, secretary general of Passenger Car Association.
Dealers slashed prices by as much as 50 per cent in recent weeks, according to local media reports, to clear their inventory of cars that do not meet new stricter emission standards. A total of 18 provinces and regions – which together account for most of China’s car sales – required vehicles to meet the new criteria by July 1.
“Short-term incentives like that boosted sales,” said Zhu Kongyuan, secretary general of the China Auto Dealers Chamber of Commerce, ahead of the report. “Yet it has also disrupted the market and undermined dealers’ profitability, and will have a negative impact on the market in the long run.”
The unprecedented slide has hit local brands particularly hard, although market leader Volkswagen AG have also seen its sales wane, according to researcher LMC.
Sales of General Motors’ Buick and Chevrolet have also declined in 2019 up to May, while Daimler AG’s Mercedes-Benz, BMW, Honda and Toyota have advanced, according to the researcher.