Car Sales in China Rise for the First Time in Two Years

So, here is the news that few of us would have expected. Car sales in China actually rose for the first time in two years as pent-up demand for new rides was unleashed as the country emerged from lockdown.

Contrary to all of the doom and gloom merchants out there who were predicting a collapse in sales, the struggling sector was given a boost with sales rising more than 4% compared to the same quarter of last year. According to the China Association of Automobile Manufacturers (CAAM), this was the first rise since a rollback of incentives happened in July of 2018.

It is not all rosy, though, when you dig a little into the published figures. Primarily, the gain was in the commercial sector, which saw a 30% hike in sales. The sales of passenger vehicles were down by 2.6%. A rebound was sort of on the cards after sales had plummeted by 79% in February and 43% in March as quarantine restriction closed businesses and stopped people from going out.

Don’t go counting your good fortune yet. According to the CAAM, the country is on course to record its third annual reduction in vehicle sales this year, with an optimistic 15% reduction, but with most analysts saying 25% reduction will be more like the final number.

Most analysts will wait for a month or two though to see if the demand will continue to be robust, and there is a chance that it may be. A lot of commuters will be looking to the security of their own car to protect themselves during their daily commute. If this is the case then we should expect to see a surge in sales for lower-end cars.

The government has extended tax breaks and other subsidies to try and support the sector, along with encouraging cities to loosen restrictions on new car registrations. But if you were expecting a boost to the world’s green movement with an upsurge in the sales of electric cars and hybrids, then you are going to be bitterly disappointed. EV sales have plummeted by almost 27% compared to the same month last year, continuing the trend that began in July of last year.

Volkswagen and Nissan are both saying demand is comparable to last year, but then foreign brands in the market have fared a lot better than the domestic ones, with a 9% reduction in market share to just about 35% overall.

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