(Bloomberg) – China’s recovery in auto sales accelerated last month, signaling the world’s largest auto market is rising after two years of slump as the economy improves and restrictions on the pandemic has decreased.
The China Passenger Cars Association said retail sales of sedans, SUVs, minivans and utility vehicles grew 7.9 percent in July from a year earlier to 1.63 million units. Sales trends have improved monthly since March before falling 6.5% in June. and BYD Co. leader in electric car sales last month.
The car industry is betting that the reopening of showrooms and malls as the coronavirus subsides in China will lead to a sustained increase in demand. The boom exacerbated the recession due to a slowing economy, trade tensions with the US and stricter environmental standards.
However, the challenges remain: the economy is still recovering and new technologies like electric motors may cause some buyers to decline buying decisions until more models have such features. launch. China’s gross domestic product rose 3.2% in the three months to June from a year earlier, after falling 6.8% in the first quarter.
The China Automobile Manufacturers Association said that in terms of auto wholesale sales alone, it was up 8.5 percent from last July to 1.67 million units. That means an increase in inventories, suggesting that the amount sold to consumers is not as strong as sales from manufacturer to dealer.
Investors were encouraged by the increase in sales. Shares of Chinese market leader Volkswagen AG have risen more than 40% from their mid-March low, while competitor General Motors Co. increased by more than 60% in that period. Domestic rival Geely Automobile Holdings Ltd., up nearly 60% and peer partner Brilliance China Automotive Holdings Ltd., a partner of BMW AG, added about 70%.
Steve Man, an analyst with Bloomberg Intelligence in Hong Kong, said German and Japanese brands will benefit most from improved demand as consumers transact. GM and Ford Motor Co. could be affected by the escalating tensions between China and the US, he said.
Wholesale sales of new energy vehicles, including purely electric, hybrid and fuel cell cars, increased for the first time this year, up 19% in July compared with a 98,000 units the year before, CAAM said.
Tesla Gigafactory in Shanghai.
Photographer: Qilai Shen / Bloomberg
Tesla, which started deliveries from its new big factory in Shanghai around the beginning of 2020, has quickly dominated the pure electric vehicle market and is a rare example of an electric vehicle maker increasing registration. month this year. Tesla sold 11,014 cars last month in China and holds the leading position in battery-powered cars, PCA said.
BYD was No. 1 in total NEV sales in July with around 14,000 units, PCA said. The company is backed by Berkshire Hathaway Inc. Warren Buffett’s, which has been supported by sales of pure electric cars as well as plug-in hybrids, also uses gasoline.
Expensive electric cars go head-to-head with the harsh Coronavirus reality
After rapid growth for several years, sales of electric cars lost momentum when the government decided to limit subsidies in mid-2019. The pandemic also hurt demand, while falling oil prices caused more competitive gas operators. China still sees electric cars as a long-term priority and has added new stimulus measures to help the industry recover.
NEV sales are expected to reach 1.1 million units this year in the country, of which Tesla accounts for about 100,000 units, CAAM forecasts. This compares to NEV’s wholesale volume of 1.21 million units in 2019, according to data from CAAM.
(Updated with analyst comment in paragraph seven.)
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