A Review of Automotive Industry in H1 2020
2020-07-30    [Source:PUdaily]
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    At the beginning of the year, impacted by the COVID-19 epidemic, major manufacturing industries in China experienced sluggish growth. Among them is the automotive industry, one of the pillars underpinning China's economy. According to China Association of Automobile Manufacturers, in the first quarter the auto production and sales volume experienced negative growth. In particular, in February they declined by 79.79% and 79.08% year on year, respectively. Into the second quarter, the industry began to recover. In April, the production and sales volume both increased slightly year on year. In May and June, the Auto Climate Index continued to rise, with both the production and sales volume achieving double-digit year-over-year growth. In June, the output of automobiles amounted to 2.325 million units, a month-on-month increase of 6.31% and year-on-year growth of 22.69%. The sales volume of automobiles reached 2.3 million units, a month-on-month increase of 4.83% and year-on-year growth of 11.87%. Both the output and sales volume reached their highest levels in the first half of the year. The auto output for the January-June period totaled 10.11 million units, down 16.62% year-on-year; and the sales volume for the period reached 10.26 million units, down 16.74% year-on-year. the decreases continued to narrow.

 

Source: PUdaily

    This year’s Spring Festival holiday was from the end of January to the beginning of February, during which time automobile manufacturers, dealers and distributors suspended their business activities. On the other hand, consumers didn't buy new cars during the holiday as they either had already made such purchase before the holiday or planned to purchase vehicles after the holiday. At this point, the COVID-19 epidemic broke out and spread like wildfire in March. This undoubtedly put extra pressure on car manufacturers. Luckily, the epidemic was ultimately brought under control in the shortest possible time thanks to the measures taken by the government and the people’s cooperation. As a result, all industries began to recover, among which is the automobile industry. This is reflected in the recovery in auto production and sales volume in the second quarter. Possibly, the following factors also contributed to the good performance of the automotive industry in Q2. First, the incentive policies introduced by local governments, which are aimed at stimulating auto consumption, helped maintain the momentum of the recovery. Second, the pent-up demand as a result of the epidemic was unleashed, resulting in retaliatory growth in auto consumption. Third, major car manufacturers conducted promotional activities to encourage new and old customers to buy cars, such as Buick's "May Car Purchase Festival" and SAIC's "Buying a Car at a 45% Discount".

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