Beijing
China’s automobile industry, a sector once hit hard by the COVID-19 epidemic, is back on track as increasing demand and strengthening incentives push positive market growth.
China’s automobile market, which was hard-hit by the COVID-19 epidemic, started to recover in April, thanks to unleashed pent-up demand and encouraging policies, with sales rising by 4.4 percent year on year. This ended a contraction streak over the past 21 months, according to the China Association of Automobile Manufacturers (CAAM).
In May, the year-on-year growth in output and sales was 15.9 percentage points and 10.1 percentage points higher than those registered in April, respectively, CAAM data showed.
Total output reached 2.19 million units in May, up 18.2 percent year on year, while sales hit 2.19 million units, up 14.5 percent from the same period last year.
Bucking the downward trend in yearly growth, retail sales of passenger vehicles registered a 1.8-percent yearly growth to 1.61 million units in May, in sharp contrast with the steep declines by 20 percent, 78 percent and 40 percent, respectively, in the first three months of the year, data from the China Passenger Car Association (CPCA) showed.
China’s car market has great potential for development, as the demand for car purchasing is still strong, said Gao Feng, a spokesperson with the Ministry of Commerce, noting that the market will maintain a steady recovery, as policies assisting enterprises will be further implemented.
All levels of government have offered multi-pronged assistance to boost the recovery of the auto market. In April, 11 central departments jointly issued a circular, urging efforts to increase support for personal auto consumption credit. It also urged the further release of auto consumption potential by appropriately lowering the down-payment ratio and loan interest rate as well as extending the repayment period.
China underlined its determination to shore up the NEV industry in its government work report this year. To stimulate NEV consumption, the government extended subsidies and tax exemptions for NEV purchases by another two years, which were set to expire at the end of the year.
In five to eight years, NEVs are expected to keep pace with fuel vehicles in terms of competitiveness, said Fang Yunzhou, president of the Hozon New Energy Automobile Co. Ltd, noting that NEV firms should enhance research and development in intelligent technology, innovate marketing modes and strengthen cooperation among industrial chains.
Besides dampening the auto industry for a period, the epidemic also ironically spurred new demand for the industry, as consumers realized the importance of owning private cars. Nearly half of interviewees, having had no plans of purchasing cars before the outbreak of COVID-19, said they might or were going to buy cars, according to a survey conducted by market information service provider J.D.Power.
Amid further COVID-19 containment, schools across the country are resuming classes, thereby unleashing growing demand from families, said the CPCA. Rising demand for cars was therefore expected as people’s enthusiasm for starting their own businesses was spurred by the country’s favorable policies.
Foreign investors are optimistic about the future of China’s auto industry. German carmaker Volkswagen has announced plans to invest 2.1 billion euros in China to develop its electric vehicle business in the country, while Tang Jin, senior research analyst at Mizuho Bank noted that China’s vast market and profound auto industry chains will encourage Japanese companies to enlarge investment rather than leaving the country.—Xinhua
