SUVs, electric cars to drive China’s auto sales in second half
China’s new car sales growth beats global average but online and used car sales lag behind other markets
Analysts predict the Chinese auto market will continue to do well in the second half of this year after strong sales in June, thanks to government policy support and a solid increase in sales of SUVs and growth in the electric car segment.
However, they said mainland Chinese used car sales and online auto sales still lag behind other countries.
Bank of America Merrill Lynch analysts expects overall July wholesale shipments in China to register 25 per cent year-on-year growth, while it forecasts further improvements in the second half in terms of automaker margins and earnings visibility.
Following a 20.6 per cent and 22.8 per cent year-on-year rise in June for wholesale and retail sale volumes of passenger vehicles respectively, BoAML research analysts Jeff Chung and Fujia Liu said they “expect strong replacement demand and consumption upgrade trends to continue into 2017”.
The growth in SUV and electric cars sales, coupled with declining inventories for high-end luxury vehicles, led Chung and Liu to predict dealership inventories would stay low in the third quarter of this year which would further support pricing.
Strong car sales growth on the mainland has been driven by policy decisions after the Chinese government halved purchase taxes from 10 to 5 per cent on all cars with an engine displacement of 1.6L or less, according to Wei Feng, senior associate at China International Capital Corp (CICC).
