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Market Insight: China’s rebound continues

Shooting star: Changan posted 146,561 sales of its own-brand vehicles in June (+39.1%), with the CS75 SUV leading the way with 21,070 units.

Record 2.3m sales in China last month reflects recovery in world’s top auto market


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20 Jul 2020

THE Chinese car industry has continued its strong performance in the wake of the coronavirus pandemic from which the world’s biggest automotive market was the first to recover, setting a new record of 2.3 million new-vehicle sales in June.


According to figures released by the China Association of Automobile Manufacturers (CAAM) last week, the June result represents an 11.6 per cent upswing from the corresponding month last year and the third consecutive month of year-on-year increases, following a 14.5 per cent rise in May (to 2.2m units) and a 4.4 per cent return to form in April (2.1m).


The positive results are particularly relevant given the pre-pandemic slowdown in the Chinese car market, which due to a broad range of economic and political factors – including the winding back of subsidies for electrified vehicles – had not seen a monthly sales increase since mid-2018.


The industry’s sales across the first quarter were deeply impacted by the COVID-19 pandemic, with March down 43.3 per cent (to 1.4m units) after a heavy 79.1 per cent plunge in February (to 300,000) and early warning signs in January when the market fell 18.7 per cent (to 1.6m).


At the end of the first quarter, the market had dropped 42.4 per cent to 3.672 million units, but at the end of first half the rebuilding process and positive momentum has seen the industry halve that deficit to 16.9 per cent, at 10.257 million.


By comparison, at the halfway point of 2019, the Chinese auto market was down 12.4 per cent on the previous year. 


The most recent official forecasts for the full 2020 calendar year, made during June, were sticking with a broad 10-20 per cent downturn from the 25.8 million vehicles sold last year. 


Commercial vehicles, led by light and heavy trucks, are continuing to underpin the growth in China, pushing up the numbers with an impressive 63.1 per cent increase in June to 536,000 units. Of these, 494,000 were trucks (+72.6%), marking an all-time record for the category.


In the pick-up truck class, 57,000 sales were recorded last month, up 74.5 per cent as the sales resurgence continues. 


For the year to date, commercial vehicles overall are up 8.6 per cent to 2.4 million units, thanks largely to the 10.8 per cent growth in truck sales (to 2.2m). Pick-ups stand at 212,000 units, now down only 7.5 per cent on 2019’s first half of trading after bogging down in earlier months.


This compares to the higher-volume, though harder-hit, passenger car sector that posted a 1.8 per cent improvement last month to 1.8 million units but remains in negative territory for the year to date, down 22.4 per cent to 7.9 million. 


SUVs and crossovers are outperforming traditional passenger cars and MPVs, with SUVs up 10.5 per cent last month with 820,200 units, placing it as the biggest-selling segment in the entire market. Crossovers climbed 26.1 per cent, while passenger cars and MPVs were down 4.9 and 11.8 per cent respectively.


Year to date, SUV volume is running just ahead of passenger cars – 3.677 million to 3.676m – with respective year-on-year deficits of 14.9 and 26.0 per cent.


Sales of ‘new energy vehicles’ – EVs, PHEVs and FCEVs – were at 104,000 last month, down 33.1 per cent, and YTD stand at 393,000 (-37.4%).


Chinese-brand passenger cars fell 11.6 per cent in June to 590,000 units, accounting for 33.5 per cent of total passenger vehicle sales, while in year-to-date terms, the 2.854 million units mark a decrease of 29.0 per cent (36.3% of total).


Changan and Hongqi are among the brands that are bucking the trend, with Changan recording a 38.1 per cent surge in sales last month to 194,406 units, placing it into positive territory for the year to date at 1.3 per cent. 


Hongqi, which is a fast-growing premium brand in the FAW Group stable, posted 15,400 sales in June, up 92 per cent, and for the first half has seen sales increase 110.7 per cent to 70,045 units. 


CAAM said in a briefing report that both automobile production and sales are continuing to gain momentum moving into the second half of the year, with the June results reflecting the fact that China’s “overall economic recovery continued to improve, the supply and demand sides of the manufacturing industry continued to pick up, the consumer market continued to improve, and major infrastructure projects began to accelerate”.


“With the continuous promotion of auto consumption policies in various regions, the market performance is generally better than expected. Automobile production and sales continued the recovery trend and maintained a good development trend,” CAAM said.


Looking ahead, the peak industry body said the Chinese market was still at the mercy of global uncertainty surrounding COVID-19.


“From the perspective of the development trend of the industry, the uncertainty of the international epidemic situation still exists, the demand in overseas markets has not yet recovered and export-dependent enterprises have not escaped from the predicament, which will affect part of the consumer demand,” CAAM said.


“At the same time, after the expiry of local consumption promotion policies, market demand may also decline due to overdraft. Therefore, enterprises in the industry should also focus on changes in the domestic market and adjust production and sales rhythm in a timely manner.”

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