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China industry body cuts 2022 auto sales growth forecast to 3%

China industry body cuts 2022 auto sales growth forecast to 3%

FILE PHOTO: Cars drive on the road during the morning rush hour in Beijing, China, on Jul 2, 2019. (Photo: REUTERS/Jason Lee)

SHANGHAI: China's automobile industry association downgraded its 2022 sales forecast on Monday (Jul 11) as anti-pandemic measures weighed on the economy and its car market, the world's largest.

The industry will sell 27 million cars this year, up 3 per cent on 2021, the China Association of Automobile Manufacturers forecast, cutting its outlook from the 27.5 million sales and 5.4 per cent growth it predicted in December

Weak demand for commercial vehicles was a factor in the downgrade, the association said at a regular press conference on Monday. It now expected a 16 per cent fall in sales of commercial vehicles to 4 million units.

Overall growth of around 3 per cent compares with the 4.4 per cent achieved in 2021 and the 1.9 per cent fall of 2020.

China's auto sector has been hit hard in recent months by China's efforts to combat COVID-19. The government has at times put many parts of the country, including Shanghai, under stringent lockdown.

Authorities are trying various incentives to revive the automobile market, with the central government last month halving purchase tax to 5 per cent for cars priced at less than 300,000 yuan (US$45,000) and with engines no larger than 2.0 litres.

That tax break has affected purchases of close to 1.1 million vehicles, bringing a tax loss of 7.1 billion yuan (US$1 billion) for the government, the official People's Daily said.

Many of the policies have been aimed at encouraging new-energy vehicle (NEV) sales. In May and June, some local governments started to offer subsidies to consumers willing to trade in gasoline vehicles for electric cars.

Some cities have also expanded quotas on car ownership.

Such policies helped create an annual rise in sales seen in June, following four months that showed falls. The industry sold 2.5 million vehicles in June, up 23.8 per cent on a year earlier, the association said.

June sales were also up 34.4 per cent from May, with sales of NEVs, among them electric, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, climbing 129.2 per cent from a year before.

While it cut its annual projection, the association revised up its forecast for full-year NEV sales, saying 5.5 million units would probably be sold, up by more than 56 per cent and compared with last year's 47 per cent growth. Passenger car sales for the year would likely rise by about 7 per cent.

Although June sales were buoyant, there are concerns that demand will once again be hit as COVID cases tick up with the arrival of the BA.5 Omicron subvariant in China.

Cities are imposing fresh curbs to rein in new clusters, ranging from business suspensions to lockdowns, and Shanghai is bracing for another mass-testing campaign.

Source: Reuters/ga

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