China’s vehicle sales will rise 3 percent this year, instead of the 5.4 percent gain predicted last December, because of a decline in demand for commercial vehicles, CAAM, a key industry group forecast on July 11, Chinese financial news media Yicai Global reported.
The CAAM (China Association of Automobile Manufacturers) scaled down its expectations for the year to 27 million units from 27.5 million because it anticipates a 16 percent slump in sales of commercial vehicles like buses and trucks to 4 million.
The lower growth forecast was made despite a surge in sales and production since the start of last month as China’s auto industry makes a full recovery from the impact of Covid-19 outbreaks this year, Yicai Global said.
Vehicle sales jumped 28 percent to 2.49 million in June, while output climbed 24 percent to 2.5 million thanks to the supply chain recovery coupled with the halving of purchase tax and local government policies to promote auto buying. Production of new energy vehicles climbed 1.3 times to 248,000, and sales soared 1.4 times to 256,000, setting new record highs. Exports jumped 57 percent from a year ago to an all-time high of 246,000.
The CAAM also predicted a 56 percent gain in NEV sales to 5.5 million this year.
Elaborating on the difficulties faced by the auto sector, the CAAM said that since the second half, chip supplies have been tight and prices have risen sharply. Automakers are picking up the pace of production and supply, but the risk of some chip shortages and mismatches still exists.
NEV production costs are still under pressure due to the continuous rise in prices of raw materials for power batteries. But with steady improvement in lithium resource production capacity at home and abroad, prices of power batteries and related raw materials will return to a reasonable range in future, the CAAM pointed out.
China’s macro economy is now picking up, but the recovery’s foundation is not yet solid, the group said. Stimulus policies in more than 30 percent of China’s regions had lapsed before the end of June, meaning the relatively short period was not conducive to steady growth in the second half. So the policies to encourage auto buying still need more time, Yicai Global noted.
In the first six months of this year, China’s auto production and sales were 12.12 million and 12.06 million units, respectively, down 3.7 percent and 6.6 percent year on year. Output and sales of NEVs reached 2.66 million and 2.60 million, both up 1.2 times from the same period of last year. Exports jumped 47 percent to 1.22 million, Yicai Global added.
