China's second-half car sales defy global slump with 8 per cent gain, as buyers return to showrooms in world's largest vehicle market
China's car sales increased during the six months ended in December, as customers returned to showrooms amid a tentative recovery in consumer sentiment in the first major economy to emerge from the coronavirus lockdown.
Sales of passenger vehicles - cars, sports-utility vehicles (SUVs) and minivans, excluding commercial trucks and buses - rose 8 per cent to 11.75 million units in the six-month period, compared with the interim a year earlier. Annual sales volume fell for the third straight year in 2020, shrinking by 6.8 per cent to 19.6 million units, according to data by the China Passenger Car Association (CPCA), as factories and businesses across the country were locked down during the first half to contain the Covid-19 disease.
"Given the huge impact from the coronavirus outbreak, the full-year sales result can be interpreted as a rare achievement, because a recovery has taken shape with customers' confidence restored," said Cui Dongshu, secretary general of the CPCA, the industry guild. "The strong growth momentum in [electric] vehicles during the second half proved to be a major growth driver."
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The slump-defying second half explains why global carmakers and start-ups are doubling down on their investments, sales and marketing in China, betting on the spending power in the world's second-largest economy to make up for declines elsewhere.
Electric cars on the assembly line at Xpeng's new factory in the Guangdong provincial city of Zhaoqing in November. Photo: Iris Ouyang alt=Electric cars on the assembly line at Xpeng's new factory in the Guangdong provincial city of Zhaoqing in November. Photo: Iris Ouyang
Premium marques, or vehicles that sell for at least 400,000 yuan (US$61,700), were the biggest winners of 2020 in China. One in six new cars sold in China now belongs in the premium category, compared with the 2017 ratio of 10 per cent, according to IHS Markit.
Daimler said sales of its Mercedes-Benz marque rose 11.7 per cent in China. Audi, the premium brand in the Volkswagen portfolio and the standard issue for ministerial vehicles, reported a 4.4 per cent increase in sales in the first nine months, while BMW posted a 6.4 per cent gain in the same period.
Electric vehicles, or new-energy vehicles (NEVs) as they are known in China, also made huge leaps in sales, rising 12 per cent in 2020 to 1.17 million units in total.
China's central government and local authorities handed out cash subsidies tax exemptions and distributed free number plates to encourage car owners to ditch their petroleum guzzlers for cars that ran on battery packs, hydrogen fuel cells or hybrid petrol-electric motors.
The government wants one in every five cars on the nation's roads to run on non-petroleum energy source by 2025, part of a plan to put China on the path to achieving carbon neutrality by 2060.
William Li Bin, chief executive of NIO, on stage during the launch of the carmaker's ET7 sports-utility vehicle in the Sichuan provincial capital of Chengdu on Saturday. Photo: Daniel Ren alt=William Li Bin, chief executive of NIO, on stage during the launch of the carmaker's ET7 sports-utility vehicle in the Sichuan provincial capital of Chengdu on Saturday. Photo: Daniel Ren
The enthusiasm for electric cars was due in no small part to Tesla's US$2 billion investment to make the Model 3 in Shanghai, which slashed the waiting period for the brand's legion of customers. Tesla's Gigafactory 3 sold more than 138,000 units of its Shanghai-made Model 3 last year.
"Tesla's locally built Model 3 inspired young customers to own electric vehicles," said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. "Fast growth in NEVs will certainly be achievable this year."
On New Year's Day, Tesla unexpectedly launched its second Shanghai-made vehicle, with a 30 per cent discount from its pre-launch guidance price. The Model Y, built with specifications preferred by Chinese customers like interior wood panelling and heated steering, set off a buying frenzy.
Some new buyers said they had to wait until the second quarter for their Model Ys to be delivered.
Passenger car deliveries rose 6.6 per cent in December to 2.29 million units. The year ended in a stark contrast to its start. First-quarter sales plummeted 41 per cent in 2020, as multiple cities across China were locked down to contain the spread of the coronavirus. Hundreds of car assemblies and parts factories were left idle, as workers were ordered to stay home to prevent the virus from spreading. That sent production and sales into a tailspin, leaving the second-quarter with a 3.6 per cent sales decline compared with the same period in 2019.
This article originally appeared on the South China Morning Post (SCMP).
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