China car sales surge in July, clocking up fourth straight month of gains

China’s July car sales increased by 16.4 per cent from a year earlier to 2.11 million vehicles, according to the China Association of Automobile Manufacturers
The association expects car sales to fall around 10 per cent this year, though, barring a second wave of virus infections, which could cause a decline of about 20 per cent

China economy

Reuters

Published: 12:02pm, 11 Aug, 2020

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China’s car sales in July climbed 16.4 per cent from a year earlier, the fourth consecutive month of gains as the world’s biggest vehicle market comes off lows hit during the country’s coronavirus lockdown.

Sales rose to 2.11 million vehicles in July but are still down 12.7 per cent for the year to date at 12.37 million vehicles, according to wholesale sales data from the China Association of Automobile Manufacturers (CAAM).

The association expects car sales to fall around 10 per cent this year barring a second wave of virus infections which could deepen the slide to around 20 per cent.

In a promising sign for many global carmakers that have invested heavily in electric vehicles for the China market, sales of new energy vehicles (NEVs) ended 12 straight months of decline with a 19.3 per cent jump to 98,000 units.

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“The sales growth shows NEV makers and customers are getting used to the new normal after the government cut subsidies last year,” said Xu Haidong, a senior CAAM official.

After growing rapidly for several years, electric-car sales lost momentum as the government moved to limit subsidies in mid-2019. The pandemic also hurt demand, while falling oil prices made gas guzzlers more competitive. China still sees electric cars as a long-term priority, and has added new stimulus measures to help the industry recover.

CAAM expects NEV sales of 1.1 million vehicles this year, a drop of around 11 per cent from last year.

NEVs include battery-powered electric, plug-in petrol-electric hybrid and hydrogen fuel-cell vehicles.

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Sales of trucks and other commercial vehicles, which constitute around a quarter of the market, surged 59.4 per cent, driven by government investment in infrastructure as well as tougher emission rules introduced this year. Sales of passenger vehicles rose 8.5 per cent.

Carmakers which have reported sales growth in July include Great Wall Motors, Geely Automobile Holdings and Toyota.

Haitong International analyst Shi Ji said that current levels of inventory in the industry seemed high, which could prompt dealers to offer bigger discounts.

Additional reporting by Bloomberg

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