China’s vehicle sales increased 29.7 per cent year on year in July to 2.42 million units, continuing a recovery that began in June thanks to reduced COVID limitations and government incentives.

However, sales for the first seven months were still 2% lower than in the same period in 2021, according to figures released on Thursday by the China Association of Automobile Manufacturers (CAAM).

New energy vehicle sales reached 120 per cent year on year in July, including pure electric vehicles, plug-in hybrids, and hydrogen fuel-cell vehicles.

CAAM analyses broader auto sales such as passenger vehicles, buses, and trucks, but the China Passenger Car Association, which released July statistics this week, focuses on retail car sales.

After a semiconductor scarcity hurt sales last year, the world’s largest auto market will witness “steady rises” in the coming months, according to CAAM’s senior official Xu Haidong.

July sales were 3.3% lower than in June, as heat waves across the country slowed manufacturing output and curtailed customer visits to showrooms.

China has attempted to stimulate auto demand by offering incentives such as lower sales taxes on small-engine vehicles and subsidies to encourage trade-ins of gasoline vehicles for electric vehicles.

Efforts to counteract COVID-19 early this year also had a significant impact on the sector, with months of strict lockdowns in the major manufacturing hubs of Shanghai and Changchun.

Higher oil and battery prices are driving consumers to more affordable plug-in hybrids, which nearly tripled in the first seven months of the year, while solely electric car sales doubled.

Annual sales of gasoline cars, which are sold at a higher discount, are expected to fall for the fifth year in a row in 2022, according to Xu Changming, deputy director of the official think tank State Information Center, who also cautioned that overall vehicle demand is not as strong as expected despite the incentives.

Commercial vehicle sales fell 21.5 per cent in July, showing that China has yet to completely recommence its logistics and infrastructure development efforts.

(Adapted from USNews.com)

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