China’s Automotive Consumption is Recovering
2020-05-18    [Source:PUdaily]
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Pudaily, Shanghai -- According to China Association of Automobile Manufacturers, in April the production and sales volume of automobiles in China showed a sign of recovery as the COVID-19 epidemic was brought under control. In the month, the output and sales volume of automobiles reached 2.102 million and 2.07 million units respectively, up 46.6% and 43.5% month on month, and 2.3% and 4.4% year on year. For the first time since the start of the year, the year-over-year growth became positive. Previously, the sales volume had declined for 21 consecutive months. The output and sales volume of passenger vehicles amounted to 1.587 million and 1.536 million units respectively, up 49.7% and 45.6% month on month, and 4.6% and 2.6% year on year.

Four months have passed since the outbreak of the epidemic. As the epidemic at home has been contained and the government introduced policies to stimulate consumption, the domestic car market is gradually recovering.

From vehicle licensing from 2019 to 2020 it can be seen that domestic car consumption is recovering. At an optimistic estimate, the year-over-year growth in newly-registered vehicles in May will become positive.

The following figure shows domestic vehicle licensing in 2019 and 2020.

 

But the epidemic has a lingering impact on domestic industries and affects China's exports. This to some extent has hit the workers’ incomes, which in turn dents consumer confidence. The epidemic has had a much bigger impact on overseas automotive markets than on domestic market. Multiple international organizations have lowered their estimates of global auto sales for 2020.

At home, in order to stimulate automobile consumption and promote the healthy development of the automotive industry, in April multiple ministries and many local governments introduced a range of policies that are stronger than those in prior month.

Based on what we saw in April, we believe that the auto industry will further recover in May. It is worth mentioning that on April 28, 11 ministries including the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Industry and Information Technology and the Ministry of Ecology and Environment jointly issued the Circular on Several Measures to Stabilize and Increase Automobile Consumption. Five measures are proposed in the circular, namely, relaxing the requirements for implementing the national VI emission standards; improving the preferential fiscal and tax policies related to the purchase of new energy vehicles; speeding up the elimination of obsolete diesel trucks; facilitating the circulation and transactions of second-hand vehicles; and making full use of automotive finance. Aimed at addressing major pain points or sticking-points that dampen automobile consumption, these measures can substantially offset the negative impact of the epidemic on the automotive industry, promote stable and healthy development of the industry and boost automobile consumption.

 

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