Date
21 August 2019
Reduced government subsidies have affected sales of new energy vehicles in China. Photo: Bloomberg
Reduced government subsidies have affected sales of new energy vehicles in China. Photo: Bloomberg

China new-energy vehicle sales drop for 1st time in over 2 years

Sales of new energy vehicles (NEVs) in China fell 4.7 percent in July from a year earlier, the first drop in more than two years, Reuters reports, citing data from an auto industry association.

NEV sales fell to 80,000 units last month in China. That compared with a growth of 80 percent in NEV sales in June. Overall auto sales in the nation fell 4.3 percent in July, down for a 13th consecutive month, the China Association of Automobile Manufacturers (CAAM) was quoted as saying on Monday.

That followed declines of 9.6 percent in June and 16.4 percent in May, as well as the first annual contraction last year since the 1990s against a backdrop of slowing economic growth and a crippling trade war with the United States.

“The main reason for new energy vehicle sales decline in July is the switch of policies,” said Chen Shihua, assistant secretary general at the CAAM, referring to China’s move to cut NEV subsidies last month.

CAAM has previously said it expects China auto sales to drop 5 percent year-on-year to 26.68 million vehicles this year. It had trimmed its forecast for a rise in NEV sales to 1.5 million, versus a previous forecast of 1.6 million.

The prolonged sales decline has made local carmakers from Geely to Great Wall cut expectation on sales and profit.

It has also prompted some global names like Peugeot maker PSA Group to close plant and adjust workforce.

China has since January been trying to boost consumption of wide-ranging goods as the world’s No.2 economy slows further in 2019 amid the trade spat with the United States.

But its measures to spur car sales have disappointed as they included no plans to relax controls over the issuance of new licenses for traditional-fuel cars in major cities, Reuters noted.

The implementation of NEV emission standards earlier than the central government’s 2020 deadline by 15 cities and provinces, which account for over 60 percent of car sales in China, have laso spooked buyers and hurt sales, the report said.

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RC

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