Sector sees strong post-pandemic numbers due to promotional campaigns, NEV growth

China's vehicle market has started to recover since April, but carmakers still face challenges to achieve sales growth for the whole year, said the country's leading industry association.

Vehicle production hit 2.33 million units in May and their sales were even higher at 2.38 million units, according to statistics from the China Association of Automobile Manufacturers released on Friday.

They were up 9.4 percent and 10.3 percent from April and up 21.1 percent and 27.9 percent from the same month last year.

The year-on-year growth rates may sound encouraging, but that was primarily because of lower comparative bases in 2022, which was a result of the COVID-19 pandemic that hit production and sales across the country, said the CAAM.

Production and sales in the first five months this year totaled 10.69 million and 10.62 million units, both up 11.1 percent.

Passenger cars, which account for the majority of vehicle sales in China, saw production and sales grow to 2.01 million and 2.05 million units in May.

Of them, sales of passenger vehicles from local Chinese marques soared 37.6 percent year-on-year to 1.10 million units. They seized a 53.6 percent share of the market, yet this was lower than in April.

The CAAM said the rise was attributed to a wave of promotional campaigns across the country.

New energy vehicles continued their momentum. Last month, 717,000 electric vehicles and plug-in hybrids were sold, up 60.2 percent year-on-year and accounting for 30.1 percent of the overall vehicle sales for the month.

In the first five months, NEVs' cumulative sales totaled 2.94 million units, up 46.8 percent year-on-year.

BYD sold 240,000 NEVs in May, twice the figure of the same month last year.

Tesla's Shanghai plant delivered 77,695 vehicles in May, soaring 142 percent year-on-year, said the company.

Tesla CEO Elon Musk paid a visit to the Tesla Shanghai Gigafactory earlier this month during his trip to China and lauded the plant for its production efficiency and quality.

Great Wall Motors, China's largest SUV and pickup maker, saw its NEV models gain further popularity as well in May, with 23,755 sold in the month.

The carmaker said NEVs accounted for a record 23.52 percent of its sales last month.

Earlier this month, the State Council said China will extend and optimize the policy to reduce or waive purchase taxes on NEVs amid efforts to promote the high-quality development of the NEV industry and tap into greater consumption potential.

It said that NEVs are a main focus of the transformation and upgrading of the automotive industry, which has broad space for development.

Reductions and exemptions on NEV purchase taxes will be prolonged and fine-tuned, and high-quality charging facilities will be built to further stabilize market expectations, improve the environment for consumption and tap into greater consumption potential for such vehicles, said the State Council.

The CAAM estimates that NEV sales in China will hit 9 million units this year, up from 6.88 million in 2022.

China's vehicle makers are expediting their efforts to explore overseas markets, with major targets including Russia, Belgium, Mexico, the United Kingdom and Thailand.

A total of 389,000 vehicles were exported last month, surging 58.7 percent year-on-year, according to the CAAM.

The figure represented a 3.4-percent month-on-month increase.

Passenger vehicle exports in May rose 66.3 percent from a year ago to 325,000 units, while exports of commercial vehicles climbed 28.6 percent from the same period last year to 63,000 units.

In the first five months, nearly 1.76 million vehicles were exported, soaring 81.5 percent year-on-year.

Great Wall Motors sold 25,131 vehicles in overseas markets in May, up 104.04 percent year-on-year. Its overseas deliveries accounted for 24.88 percent of the carmaker's total sales in the month.

In the first five months, its exports totaled 98,900 units, doubling the figure in the same period last year.

SAIC Motor, China's largest carmaker by sales, sold 438,500 vehicles in overseas markets, up 47.7 percent year-on-year.

Chinese startup Hozon, which owns the electric Neta brand, announced its entry into Jordan last week, as its latest move into global markets.

Neta has been available in a number of countries and regions, including Thailand and Israel.