China's Auto Sales Steadily Recover, Stimulus Introduced

Passenger car sales across China have been recovering steadily during the first three weeks of this month as local governments have introduced stimulus packages to help the industry after car buyers recoiled from purchasing amid the COVID-19 crisis, Mysteel Global has learned.

In the first week of March, daily sales of passenger cars averaged 16,700 units, down 57% on year, according to the latest data from the China Passenger Car Association (CPCA) published on March 25. In the second week, sales increased to 21,700 units, admittedly still down 44% on year, whereas during the week of March 16-22, daily sales averaged 25,800 units, down by a slightly improved 40% on year, the association noted.

In the past few weeks, sales have generally recovered, especially in the third week where the pace of recovery quickened, according to CPCA, which noted that the year-on-year daily sales decline in the last week of February was as high as 61%.

Since the beginning of this year, China's central government has advocated on many occasions the introduction of policies to help the auto industry resume operations and boost auto sales, Mysteel Global noted.

"The automotive industry is the pillar of China's consumption...Auto retail sales account for 10% of total retail sales of all goods," Xian Guoyi, director of Department of Trade in Services and Commercial Services, Ministry of Commerce, commented in a regular MoC press conference on March 26.

"... (MoC) encourages local regions, based on their own situation, to roll out policies promoting new energy vehicle consumption and old-for-new exchange, to further stabilize and expand auto consumption," Xi said.

Under the central government's call, local governments have enacted a series of policies to rescue the industry, including providing subsidies and increasing the quotas for vehicle registration plates (a tactic governments have used to limit vehicle ownership), Mysteel Global noted.

Hangzhou city, in East China's Zhejiang province, for example, will increase its plate quota for 2020 by 20,000, a local government announcement showed, while Changsha city in Central China's Hunan province and Foshan city in South China's Guangdong province will each provide subsidies of Yuan 3,000 ($428.6) on the purchase of gasoline-fuelled passenger cars while Guangzhou city in Guangdong is offering subsidies of up to Yuan 10,000 for those buying a new energy vehicle, Mysteel Global learnt.

Over January-February, China's total vehicle sales plunged by 42% on year to 2.24 million units while total output declined 45.8% on year to 2.04 million units, as Mysteel Global reported.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.