Monthly car sales in China rise for first time in almost a year

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Car sales in China rose for the first time in nearly a year last month, evidence that the world’s largest auto market is rebounding from the coronavirus crisis and the trade war with the United States.Retail sales of cars, SUVs and multi-use vehicles rose 1.9% from a year earlier to 1.64 million units in May, the China Touring Car Association said on Monday. This is the first gain since June 2019.

The government has added stimulus measures such as tax rebates to lure consumers to showrooms, while automakers that shut down operations amid the coronavirus outbreak are now offering generous discounts. The pandemic has exacerbated a slump in sales in its third year, with an economic slowdown, trade tensions and stricter emission standards weighing on demand.

Global automakers have spent billions of dollars expanding in China in recent decades, and manufacturers such as Tesla Inc., General Motors Co. and Volkswagen AG are not discouraged in their efforts to harness the market’s long-term growth potential, including for electric vehicles. The German manufacturer said this month that it will become the largest shareholder in battery company Guoxuan High-Tech Co., and it is seeking a 50 percent stake in a Chinese EV partner.

A drop in sales of new-energy vehicles, including electric cars, has also slowed, PCA said. NEV sales fell 26%, following a 30% decline in April and 49% in March.

Tesla was the best-selling NEV brand with 11,095 vehicles, PCA said. The U.S. company began deliveries from its massive new factory in Shanghai around the beginning of the year. Monthly registrations of new Tesla vehicles in China have fluctuated this year amid the virus, from a low of 2,314 in February to a high of 12,710 in March, according to data from the state-backed China Automotive Information Net.

After growing rapidly for several years, electric car sales have lost momentum since the government decided to limit subsidies to mid-2019. The pandemic has also hurt demand, and falling oil prices have made gas-hungry people more competitive. The government still considers electric cars a priority, and has added a series of new stimulus measures to help the industry recover.

Full-year car sales in China could fall by about 10 percent following sharp declines at the height of the virus crisis earlier this year, APC Secretary General Cui Dongshu said in a media appeal. His view is more optimistic than that of the China Automobile Manufacturers Association, another industrial group, which forecasts a decline of 15 to 25 percent.

Bloomberg.com

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