China’s May auto sales seen up further, but concerns stay
Source: Mysteel
Jun 05, 2020 15:30
Sales of passenger vehicles in May averaged 49,000 units/day, up by 12% on month but only stable from the same period last year, according to data from China Passenger Car Association (CPCA) released on June 3.
The association commented that sales during and around the Labour Day holiday (May 1-5) stayed strong. “Local authorities in some regions have introduced stimulus policies and these, coupled with the promotions from dealers during holiday, encouraged more consumers to come to vehicle showrooms and purchase,” CPCA said in the release, but added a warning that the sales showed signs of weakness starting late May.
The continuous rise in auto sales was also reflected the digestion of vehicle stocks, with the Vehicle Inventory Alert Index slipping 4.6 basis points on month to 54.2 last month, the latest June 2 report from China Automobile Dealers Association (CADA) showed. On year, the index was still 0.4 basis point higher and above the threshold of 50.
“Dealers are under huge stocks pressure and they opted to offer discounts to generate higher sales, which has eroded their profits,” CADA said in the report.
Commercial vehicle sales might perform better going forward, a Beijing-based market insider said. “In order to shore up the economy against the negative influence of the COVID-19 emergency, China is initiating some (infrastructure) construction projects. This will strongly stimulate commercial vehicles sales, while passenger cars – durable goods that are seen as discretionary purchases – suffered a deeper impact as a consequence of the virus,” Mysteel Global was told.
Sales of heavy-duty trucks across China are expected to increase 62% on year to 175,000 units for May, despite an on-month decline of 8.5%, as reported.
“Q2 auto sales are very likely to see on-year growth – which is good – but the rest of the year, the development of the auto industry overall will be determined by many circumstances including the progression of the virus, the health of the economy and government policies,” a Shanghai-based analyst commented.
However, a slowdown in auto production this month is a possibility, a recent Mysteel report suggested, as automotive sheet stocks at car producers have increased of late while their daily consumption has declined.
By May 31, auto sheet stocks at 17 sampled manufacturers had increased 2.13% on month to 65,800 tonnes while daily steel consumption at those car makers had slipped by 1.2% on month to 3,040 tonnes/day, Mysteel’s survey showed.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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