MNI INTERVIEW: China Car Sales To Recover After April Drop
China's retail car sales will return to positive month-on-month growth in May and June, while year-on-year growth remains uncertain, a car industry expert tells MNI.
China’s month-on-month automobile sales will turn positive in May and June following April's 9.4% fall, a key factor behind slowing domestic consumption, as prices stabilise and government trade-in policies take effect, but year-on-year growth remains uncertain, a leading industry expert told MNI.
Consumers had delayed purchases in April as they awaited greater price stability, particularly among internal combustion engine (ICE) vehicles, said Cui Dongshu, secretary-general at the China Passenger Car Association (CPCA), pointing to the 5.7% y/y fall of domestic passenger car sales to 1.5 million units last month.
ICE sales fell 10.8% y/y and 20.4% m/m, CPCA’s data showed.
Cui noted m/m sales should turn positive as firms have little room for further price cuts. The stability will spur transactions as government plans to subsidise trade-ins accelerate, stimulating growth especially for ICEs, he continued. But annual growth depended on many factors, such as domestic consumer sentiment, Cui noted.
IMPROVING SIGNS
Passenger car sales for the first 20 days of May reached 900,000 units, down 5% y/y but up 19% m/m, while cumulative retail sales for 2024 hit 7.267 million units, up 6% y/y, according to data from the China Association of Automobile Dealers.
ING Economics identified the auto-sector drop as the “biggest drag factor” behind worse than expected retail sales, which slowed to 2.3% growth in April.
China’s Ministry of Commerce noted large-scale consumer goods trade-in programmes alongside related fiscal and credit support will generate over CNY1 trillion of domestic demand by boosting automobile and household goods consumption, consolidating the economic recovery. (See MNI China Trade-ins To Boost Consumption - MOFCOM)
China’s car exports, which grew 57.9% in 2023 to 4.91 million vehicles, will slow to around 20% growth this year, Cui added.