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August 5, 2020

China auto industry shows signs of recovery after two-year slump

Following the news China auto sales are expected to rise 15% year on year in July 2020, Animesh Kumar, director of automotive consulting at GlobalData (just-auto's parent), said the domestic industry had made "a miraculous turnaround".

By Olly Wehring

Following the news China auto sales are expected to rise 15% year on year in July 2020, Animesh Kumar, director of automotive consulting at GlobalData (just-auto's parent), said the domestic industry had made "a miraculous turnaround".

"The COVID-19 pandemic originated from China and naturally the country's automobile industry suffered significantly in the first few months of 2020. The vehicle sales around spring festival holiday (January-February) declined by 42% year on year. The impact of the COVID-19 was at its peak in February and the vehicles sales during the month witnessed a year on year decline of 80%. In March, the vehicles sales were 43.3% lower than a year ago. However, since then, Chinese auto industry has managed a miraculous turnaround.

"As per the preliminary figures stated by the China Association of Automobile Manufacturers, July 2020 would witness year on year increase of 15%. It marks the growth in vehicle sales for the fourth consecutive month. Multiple factors have contributed to the turnaround. While the statistics regarding the reported cases of COVID-19 in China raise eyebrows, the numbers suggest that China has effectively controlled the spread of the virus. Automotive production and supplies resumed and China lifted restrictions on the movement of goods and people in April.

"The increased sales volumes during the past four months can also be attributed to the backlogged orders in the first quarter, sales promotions by OEMs through attractive discounts, cashbacks and giveaways such as free additional oil changes, gasoline cards, gift coupons and incentives by the local government on new vehicle purchase and faster new vehicle launches by OEMs. The consumer sentiment is rising and buyers are returning to automotive showrooms.

"The sales revival compared to the initial months in 2020 indicates that the market has largely recovered from the impact of the pandemic. However, the fact that the monthly sales during the past four months are higher than the sales during the same period last year could be a sign that the industry is coming out of an over two year slump."

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