Car sales continue downward trend
June 18, 2019 Category China News Round-up, Weekly
China’s car sales continued their long downward trend in May due to weak demand and macro-economic factors. Car manufacturers sold a total of 1.91 million vehicles in China last month, down 16.4% year-on-year, according to the China Association of Automobile Manufacturers (CAAM), marking the 11th straight month of decline after falls of 14.6% in April and 5.2% in March. From January to May, the country sold a total of 10.27 million vehicles, down 13% compared with the same period last year. The CAAM said that based on the situation in May, the downward trend was due to weak consumer demand and some automakers slowing production to reduce the burden on the retail market.
Xu Haidong, CAAM’s Assistant Secretary General, said one key reason for the drop was provinces implementing “China VI” vehicle emission standards earlier than the central government’s 2020 deadline, stoking uncertainty among manufacturers. The Association noted that with the increase in the number of models meeting the new emission standards and a series of policy measures which will reduce tax and other fees in the second half of this year, the passenger car market will get a boost.
Sales of passenger vehicles reached 1.56 million in May, down 17.4% compared with the same month last year. Sales of commercial vehicles totaled 351,000 last month, down 11.8% year-on-year. Despite a weak performance in the overall auto market, sales of NEVs are booming. From January to May, new-energy vehicle sales surged 41.5% year-on-year to 464,000 as production jumped 46% year-on-year to 480,000 vehicles. Earlier this year, the CAAM forecast flat 2019 sales at 28 million, while industry insiders tend to predict that overall sales in China’s auto market will decline this year. Auto sales fell in 2018 for the first time in more than two decades, dropping 2.8% to 28.1 million, hit by macro-economic factors, the Sino-U.S. trade war and weak consumer confidence, the Shanghai Daily reports.
Meanwhile, Shanghai’s Jiading district government has announced a plan for the development of the hydrogen fuel cell vehicle industry. A 2.15 sq.km. hydrogen park will be established in the Shanghai International Auto City, and by 2025, the annual output value of fuel cell vehicles is expected to reach CNY50 billion. China aims to have 1,000 hydrogen filling stations and 1 million hydrogen-powered vehicles by 2030.
Chinese carmaker Geely Auto Group agreed to partner with South Korean battery maker LG Chem in the fast-growing new energy vehicle segment. Shanghai Maple Guorun, a subsidiary of Geely, will form a 50-50 joint venture with LG Chem in China with a registered capital of USD188 million to manufacture and sell batteries for new energy vehicles. When completed by the end of 2021, the joint venture is expected to have an annual production capacity of 10 GWh, and the batteries would be installed on Geely’s vehicles from 2022. Geely is planning to launch more than 30 electrified vehicles, including hybrids and pure electric vehicles, in the next two years as part of its ambitious electrification plan called Blue Geely Initiative released in late 2015. According to the plan, Geely aims for 90% of its sales to come from electrified vehicles starting from 2020. The carmaker launched a pure electric vehicle brand called Geometry in April 2019 and the first model under the brand, Geometry A, has hit the market.
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