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China leads auto industry recovery as sales top expectations

BEIJING/SHANGHAI (Reuters) – China’s vehicle sales are likely to hit 25.3 million units this year, an industry body said on Friday, as the world’s biggest vehicle market continued to lead the global auto industry recovery from lows hit during the COVID-19 pandemic.

FILE PHOTO: Baojun cars wait for sale in front of a dealership in Lushan county, Pingdingshan, Henan province, China November 16, 2018. REUTERS/Yilei Sun

Xu Haidong, senior official at China Association of Automobile Manufacturers (CAAM), told an annual conference of the association in Beijing that CAAM expects Chinese sales this year of 20.2 million passenger vehicles and 5.1 million commercial vehicles, which include trucks and buses. China sold 25.77 million vehicles last year.

Xu said CAAM’s forecast for next year’s overall sales is 26.3 million vehicles, up around 4% from this year, thanks to supportive government policies and automakers’ discounts.

Xu said China expects to sell 1.8 million new energy vehicles (NEV) next year, up from 1.3 million this year and 1.2 million last year. NEVs include battery-powered electric, plug-in petrol-electric hybrid and hydrogen fuel-cell vehicles.

CAAM also expects Chinese sales to hit 30 million vehicles in 2025.

In May, after months of lockdown policies, CAAM predicted China’s auto sales would fall 15% to 25% this year due to the impact of the virus, it later tweaked the forecasts as sales rebounded.

Auto sales in China rose 12.6% in November from the same month a year earlier to 2.77 million vehicles, the eighth straight monthly rise, CAAM data showed.

Sales of new energy vehicles (NEVs) surged 105% to 200,000, their fifth consecutive month of gains. NEVs include battery-powered electric, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles.

NEV makers such as homegrown Nio Inc and Xpeng Inc as well as foreign groups, such as Tesla Inc, are expanding manufacturing capacity in China where the government has promoted greener vehicles to reduce air pollution.

As the global auto industry is hit hard by the COVID-19 pandemic, China has become a ray of hope for automakers, including Volkswagen AG and General Motors Co. Global automakers including Toyota Motor Corp and Honda Motor Co Ltd have forecast higher profit on surging China sales.

(This story corrects to say 20.2 million, not 20.2, passenger vehicle sales in second paragraph)

Reporting by Yilei Sun and Brenda Goh; Editing by Sam Holmes, Christopher Cushing, Jane Merriman and William Mallard

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