Posted on 18 Sep 2020
The pickup in China’s automotive market seen in August is likely to gain further traction this month and next, according to a new report from Mysteel’s Research Institute (MRI). Traditionally, September-October are busy months for the country’s auto market but this year business could get a further boost from the longer National Day holiday which falls in this period, and upcoming large-scale auto promotions, the MRI report notes.
“The reviving trend in (China’s) auto industry is clear, with a series of government incentives for the sector taking effect in the second half of this year,” the report maintained. “The Beijing automotive exhibition is about to start in September where new models will be launched, (and) before consumers start enjoying the long holiday their buying sentiment is getting stronger. All these factors will keep heating up the auto market,” it maintained.
This year, the National Day holiday collides with the country’s Mid-Autumn Festival, with the result that the break will span October 1-8, one day longer than usual. With the COVID-19 outbreak being largely contained domestically, the anticipated popular trend of consumers taking road trips over the long holiday is seen promoting sales of new cars, the report pointed out.
Large motor shows will also help boost auto sales. The automotive exhibition in Chengdu, Southwest China’s Sichuan province, held over July 24-August 2 saw many new automotive models unveiled and upgraded versions of existing models introduced – an event which industry watchers said contributed greatly to the buoyant auto sales in August, as reflected in the statistics below. Beijing will also be hosting the Beijing International Automotive Exhibition over September 26-October 5, Mysteel Global noted, an annual event bringing together hundreds of domestic and international automakers and components suppliers.
Besides, September also marks the start of the new semester for Chinese university students, an occasion seen triggering some demand among students or their parents for new cars, the report indicated.
China’s passenger car sales recover faster; commercial car sales hit record highs
China’s auto production and sales started to rebound since April following the COVID-19 outbreak, encouraged by a series of government policies such as extending tax reductions on new vehicle sales.
The recovery of the country’s auto industry gathered pace in August, with passenger car sales seeing marked rises and commercial vehicle sales hitting record highs, MRI noted.
Last month, domestic auto production and sales reached 2.1 million units and 2.2 million units, up 6.3% and 11.6% on year respectively, according to the latest statistics of the China Association of Automobile Manufacturers (CAAM).
“The evident recovery in the passenger car market had been foreseen by industry watchers. Against the backdrop of the reviving Chinese economy, consumer confidence strengthened further which supported their purchasing behaviour,” the report said. Besides, some luxury carmakers launched promotion campaigns that also boosted sales of passenger cars to some degree, it added.
As for commercial cars, production and sales of these both hit record highs during August. This was mainly thanks to the vibrant market for trucks, whereas the output and sales of buses continued to decline.
Truck sales have been supported by infrastructure construction, plus the phasing-out of vehicles conforming to the old National Emission Standard Stage III, as well to strong demand from the logistics and transportation sectors, as Mysteel Global has reported. “With the deadline for eliminating all Stage III trucks from the nation’s roads being December this year and with the various subsidies being offered for new heavy trucks, the exit of old trucks will gain pace in the fourth quarter, providing firm support for truck sales,” the report stated.
Breakdown of China’s auto sales in August
Source: CAAM, MRI
China’s market for NEVs expanding to rural areas
In August, China’s production and sales of new energy vehicles (NEVs) increased for a second straight month, mainly thanks to the campaign promoting the use of more environmentally-friendly cars into China’s rural areas.
NEV production and sales in August reached 100,600 units and 109,000 units, up 17.7% and 25.8% on year respectively and marking the highest results for any August on record, according to CAAM’s data.
“Affordable NEVs priced at around Yuan 100,000 ($14,771) meet the aspirations of many rural residents, so these types of cars may be the key for the further revival of China’s NEV market,” MRI’s report stated, naming several domestic NEV brands in this category such as Nio, Leading Ideal ONE and Weltmeister whose August sales reached 3,965, 2,711 and 2,057 respectively.
“Rural residents may become the leading buying force (for NEVs). Foreign-invested companies, joint ventures and emerging NEV forces will jointly boost the market,” the MRI report stated, suggesting that NEV production and sales may accelerate in Q4, against the low base of last year’s Q4.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
