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News - Market Insight - Market Insight 2020

Market Insight: China’s road to recovery

Uptown: Geely Automobile reported a “V-shaped recovery” in sales last month with 105,468 units marking a two per cent increase on April 2019 and a 44 per cent rebound compared to March 2020.

Outlook promising, but not yet clear, as car sales in China up 4.4 per cent in April

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26 May 2020

NEW-VEHICLE sales in China climbed 4.4 per cent to 2.07 million units in April, reflecting pent-up demand among buyers as they emerged from coronavirus lockdowns that have wreaked havoc on the world’s biggest automotive market this year.

 

It was a major turnaround from the unprecedented 79.1 per cent monthly downturn recorded in February, and the follow-up 43.3 per cent decline in March.

 

It also stands as the Chinese car industry’s first monthly sales increase in almost two years – since June 2018 – as a broad range of economic and political factors have tempered the phenomenal growth recorded over previous years, not least of which was the winding back of subsidies for electric cars and other so-called ‘new energy vehicles’.

 

The Chinese market rebound stands in stark contrast to other major markets where lockdowns preventing people from leaving their homes – let alone dealerships opening their showrooms – are either still in force or only just starting to ease.

 

Plunging sales across Europe, in particular, was expected but shocking all the same as the results have progressively rolled in and were confirmed last week by the European Automobile Manufacturers Association.

 

Among the 27 EU markets, which fell 76.3 per cent in total, was Italy (-98%), Spain (-97%), Portugal (-87%), France (-89%), Germany (-61%), Belgium (-90%) and Ireland (-96%), with the best-performing major markets including Sweden (-38%), Denmark (-37%), the Netherlands (-53%), Czech Republic (-53%), Austria (-65%) and Poland (-67%).

 

As reported, the UK market plummeted 97 per cent, while Russia also dropped significantly, down 72 per cent for the month.

 

China’s road to recovery is not expected to be a smooth one, but the turnaround in April is a welcome sight for the industry and the China Association of Automobile Manufacturers (CAAM) has now forecast a 15 per cent sales contraction for the calendar year – with a footnote that this could blow out to 25 per cent if the situation deteriorates.

 

CAAM was also quick to emphasise that supply of parts from overseas countries still deeply impacted by the COVID-19 pandemic could disrupt production and therefore sales in the months ahead.

 

For the four months ending April 30, total sales in the Chinese market of 5.761 million units marks a 31.1 per cent downturn compared to the same period last year.

 

Of these, 4.433 million passenger car sales represent a 35.3 per cent year-on-year downturn, while commercial vehicles are faring much better with 1.328 million units, down 12.4 per cent.

 

In detailing the April results, CAAM said the “significant recovery” in motor vehicle production and sales came as the “domestic epidemic prevention and control continued to improve” and that a series of favourable policies by the central and local governments had led to a restoration of manufacturing output – now back at the same level as this time last year – and all other related vehicle enterprises.

 

The U-turn at this early stage is being driven by the commercial vehicle sector, which actually turned in a record result of 534,000 units last month, up 31.6 per cent compared to April last year.

 

This was tempered by the fragile passenger vehicle sector, which in overall terms was down 2.6 per cent to 1.536 million units.

 

SUVs were the best performers, up 7.3 per cent to 696,000 units and offsetting the declines among passenger cars – at 743,000, down 6.2 per cent – as well as MPVs (61,000, -36.0%) and crossover passenger cars (36,000, -11.5%).

 

Double-digit declines are never welcome but the segment results contrast starkly with the lockdown periods and most of the month-on-month gains in the various categories range between 40 and 70 per cent.

 

Sales of ‘new energy vehicles’ (NEVs) came in at 72,000 units last month, down 26.5 per cent on April last year. Pure-electric vehicles accounted for 51,000 units (-28.6%), with most of the 21K balance made up of plug-in hybrids (-20.7%). A small number (73) of fuel-cell electric vehicles were also sold (+9.4%).

 

For the year to date, NEV sales are at 205,000 units, down 43.4 per cent.


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