The leaders of the world’s largest automotive introduced measures to turn around last year’s slide and perk up sales in China. The moves come as China is in the midst of a trade standoff with the U.S.
The moves come as the Chinese government struggles with 13 straight months of automotive sales declines, as well as an overall stagnation of the country’s economy. Once a fireball of economic activity, China’s economy has cooled significantly in the last two years.
However, the ongoing stalemate with the Trump administration has hampered recent efforts by the State Council to jump start the economy. The new measures are designed to overcome the impact the tariffs are having.
The State Council is encouraging local governments to ease restrictions on auto sales or even remove the them altogether. It also wants incentives to encourage the purchase of new energy vehicles, such as battery electrics, hybrids and fuel cell-powered vehicles.
China’s been encouraging the purchase of electric vehicles for some time now, making the country the largest market for the vehicles. However, after the latest round of government enticements ended, sales of the pricier NEVs began to slide. LMC Automotive last month estimated a decline of about 5% for the full year.
The rate of sales declines is slowing, according to the China Association of Automobile Manufacturers, or CAAM. In July, the rate continued to narrow on yearly basis with production and sales reaching 1,800,000 and 1,808,000 units respectively, down 5% and 12.1% than that of last month, and down 11.9% and 4.3% year on year. The year-on-year decrease rate shrank 5.4% and 5.3% than that of last June.
For the first seven months, the production and sales of automobiles were 13,933,000 and 14,132,000 units respectively, down 13.5% and 11.4% year on year. The decrease rate narrowed 0.2 percentage points and 1 percentage point than that of the first six months, the group noted.
Even NEV sales were down on a monthly basis. In July, automakers sold 80,000 NEVs, which is off 4.7% from the year ago period. Of that, pure electrics accounted for 61,000 units, which is a 1.6% jump year-over year. Unfortunately, it’s only bright spot. Companies sold 19,000 PHEVs, which is down 20.6% compared with the same period a year ago.
Howver, through July, the sales of new energy vehicles were up significantly. They reached 699,000, increasing 40.9% year on year. To be specific, the sales of BEVs hit 551,000 units, a jump of 47.8% year on year; such figures for PHEVs were 146,000 units, representing an increase of 18.9% year on year.
This happened while China’s economy stumbled more sharply than expected at the start of the third quarter, as Beijing’s trade dispute with the United States continues to take a heavy on businesses and consumers. Second-quarter economic growth slowed to a near 30-year low, Reuters reported.
To keep the good times rolling on NEVs, Beijing will encourage credit support for purchases of new energy vehicles and smart home appliances.