China’s passenger car sales rose 28.9% year-on-year in August, the strongest in a decade, boosted by electric power, a trade federation said on Thursday. A total of 1.87 million units were sold last month, the China Federation of Individual Automobile Manufacturers (CPCA) said. Sales of hybrid and electric vehicles have doubled in a year in the world’s largest auto market.
Strong market contraction in spring
Car sales had experienced a strong contraction in May (-17% in one year) but especially in April (-40.4%), the largest since 2020. To support the sector in a context of economic slowdown in China and consumption slow, the government had published a series of measures in July to stimulate sales.
An extension of the tax relief for the purchase of electric vehicles was then discussed. This measure was finally confirmed last month, which allowed the sector to benefit from it. The local manufacturer Geely saw its sales increase in August by +429% in one year.
Massive subsidies to incentivize the transition to electricity
In China, the electric car market is especially competitive. Many builders are racing to take advantage of this opportunity, buoyed in recent months by generous purchase subsidies from municipalities or local governments.
These measures are supposed to support the economy, at a time when anti-Covid restrictions weigh heavily on the activity of the Asian giant. Beijing has set itself the goal this year of increasing its gross domestic product “by approximately 5.5%”. But many economists doubt that it will be reached due to the health restrictions that are slowing down the recovery.
Even if it were, that figure would mark China’s weakest growth pace since the early 1990s, excluding the Covid period. This slowdown comes in a politically sensitive year in which, barring a cataclysm, President Xi Jinping will be re-elected as head of the Chinese Communist Party (CCP) and thus the country in October.
Source: BFM TV
