Following the news that major OEMs in China witnessed strong year-on-year growth in vehicle sales volume in May 2020;

Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“China automotive market was the first to be hit by COVID-19 pandemic. As per China Association of Automobile Manufacturers (CAAM), sales in first quarter declined by 42% year-on-year. However, with the pandemic reportedly fading out, automotive production and supplies resuming and China lifting restrictions on the movement of people and goods since early April, vehicle sales have started to stabilize.

“Sales volumes improved in April by 35.6% compared to previous month and year-on-year decline reduced to 5.5% compared to April 2019. May 2020 has further witnessed improvement in sales volume. According to preliminary estimates released by CAAM, new vehicle sales volumes rose by around 11.7% year-on-year in May 2020. Most OEMs, including FAW-Volkswagen, Geely, Nissan, Toyota, Changan Ford, Mazda and Chery Jaguar Land Rover (CJLR) reported increase in their year-on-year and month-on-month sales.

“The increased sales volumes are attributed to the backlogged orders in the first quarter, sales promotion by OEMs through attractive discounts, cashbacks and giveaways such as free additional oil changes, gasoline cards and gift coupons, incentives by the local governments on new vehicle purchase and faster new vehicle launches by OEMs.

“Domestic automotive market is of key importance to China’s economy and local governments have hit the right button to revive the economy faster through incentivizing the new vehicle purchases. It is evident that the need for personal mobility, due to concerns regarding safety and hygiene, has pushed the demand for new cars and attractive incentives by local governments has lured customers to make immediate or prepone their purchase decision. Furthermore, the implementation of China VI emission standard from 1 July 2020 is expected to promote incentive-based scrappage of older vehicles and drive new vehicle sales in China, giving it an opportunity to lead the global automotive market recovery.”