AutoBeta(AutoBeta.net)06/19 Report--

After the trough of 2020, China's auto market has achieved two consecutive months of sales growth in April and May under the control of the epidemic, which also makes many car companies and dealers feel that they are still thinking. However, retail sales of narrow passenger cars are expected to fall 8 per cent year-on-year to 1.63 million in June, according to the latest forecast released by the federation of passengers.

Indeed, in the market environment of the past May, domestic consumption has fully recovered, and automobile consumption has outperformed the overall market driven by policies, achieving positive year-on-year growth for the first time since the outbreak of the epidemic, while also ushering in the first positive wholesale growth in 22 months.

According to the latest data from the National Bureau of Statistics, while the total retail sales of consumer goods fell 2.8 percent in May compared with the same period last year, the total retail sales of consumer goods in automobiles rose 3.5 percent against the trend. According to the China Automobile Association, car sales in China in May were 2.194 million, up 14.5 per cent from a year earlier, and seven of the 10 listed vehicle companies achieved year-on-year sales growth, accounting for about 70 per cent. It shows that in May this year, the car market, led by most of the car companies that achieved year-on-year growth in sales, made the sales this month a new high for the whole year.

The Federation said that thanks to the mitigation of the epidemic and the continuous release of the demand for car purchase and replacement from students from all over the country to their families, as well as the factors of promoting consumption policies in various places, consumer confidence has been greatly improved after the epidemic, and the car market has continued to strengthen and show a V-shaped rebound at the bottom.

However, according to the latest survey data, the popularity of the car market in June and transactions have declined compared with the previous month, with retail sales data from major manufacturers falling by 2% and 21% respectively in the first two weeks. The Federation expects the third week to rise to-16%, while the fourth week is the impulse time at the end of the month, as well as the impact of more working days, which is expected to be close to-10% a day compared with the same period last year.

Judging from the specific market performance in recent months, the luxury car market has performed well. According to the Federation of passengers, luxury car production rose 29% in May from a year earlier, while retail sales rose 28% year-on-year. This reflects the rapid pick-up of high-end demand for upgraded consumption, with some luxury car brands such as Audi, Mercedes-Benz and BMW selling more than 10,000 models in May.

According to a luxury car dealer, "there is a lot of passenger flow in May, especially models with less than 500000 yuan are so tight that they don't even have time to eat." But the May peak should be over. He believes: "from the arrival of store passenger flow and sales in June, the overall tends to stabilize, which is also a normal rhythm."

In his view, the larger growth in the car market in May may be due to the concentrated release of the consumption potential accumulated in February-April after the epidemic. Many people who originally planned to buy cars at the beginning of the year temporarily postponed their car purchase plans because of the epidemic, and began to buy cars after the epidemic situation improved in May, so they will return to stability after a concentrated release in June.

The China Automobile Circulation Association also pointed out that the higher car market sales in May was the release of "compensatory" consumption potential and related to multiple stimulus measures. However, the impact of the epidemic on the future has not completely subsided. Although the inventory pressure of dealers has slowed down in a short period of time, most brands have overdrawn the market demand in advance. At the same time, with the arrival of the traditional off-season, dealers will still face greater sales pressure.

Nevertheless, with regard to the performance in June, Cui Dongshu, secretary general of the Federation of passengers, said that due to the large base caused by the switching between the five countries and six countries last year, coupled with the off-season of traditional sales in June, it is difficult to achieve positive growth compared with the same period last year. However, wholesale sales are expected to achieve positive growth month-on-month, because car companies are making the final sprint for mid-year sales through the "price for volume" promotion during the "June 18" festival. But the details will also depend on the final sprint performance. At the same time, in June, local auto shows have been launched normally, which will also play a certain role in promoting.

Some institutions said that the demand for rigid market demand suppressed by public health events from March to May this year has been basically released, adding that June is a traditional holiday and last year's policy switch, the decline in sales in June compared with the same period last year is a high probability of decline. But in the medium term, with the gradual stabilization of the economy and the impact of market stimulus, the passenger car market is expected to continue to recover in the second half of the year. Cui Dongshu believes that June to August is the traditional off-season, so at least until September, the market is likely to have significant restorative growth.

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