Although most auto manufacturing companies have returned to full production by now following a period of mandated shutdowns, the pre-pandemic demand for new vehicles has not followed suit.
According to the China Association of Automobile Manufacturers, auto sales for the remainder of 2020 are expected to plunge anywhere between 10% to 20% amid the coronavirus pandemic in China. Despite the forecast being upgraded from a 15% to 25% drop, it is still a volatile market for auto manufacturers, given that China’s market was already suffering from a contraction long before the onset of the pandemic.
The month of June saw passenger vehicle sales fall by 6.5% compared to the previous month on a year-over-year basis in across China; conversely however, total vehicle sales increased by 11.6%, to a total of 2.3 million new vehicles sold. The sudden increase amid a contracting vehicle market can most likely be attributed to the sudden 63% rise in commercial vehicle sales, which were mostly used to mitigate the spread of COVID-19 across the country.
Due to the continued lack of demand for new vehicles, the Chinese government has been digging into its tickle trunk of incentives to spur buyers into the market. According to the June data though, it appears to have had little effect.
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Information for this briefing was found via China Association of Automobile Manufacturers and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
