Did Chinese Auto Sales Recover Last Month?

Matt Posky
by Matt Posky

The China Association of Automobile Manufacturers (CAAM) reports that April was healthier than expected, resulting in an estimated 2 million new vehicle sales. This would be the first time in a couple years the market has seen any monthly growth, with CAAM taking to the Tencent-owned WeChat to announce a single-percent gain over April 2019.

Considering the pandemic is anticipated to suppress global auto sales by anywhere from 10 to 20 percent, it seems premature to call anything a victory. Likewise, influence from the Chinese Communist Party has made any statistics coming out of the country highly suspect. Much of the world is currently under the impression that the nation’s leadership is in an all-out effort to project the country’s strength after failing to share helpful information in a timely manner and downplaying its coronavirus-related deaths. We don’t know what information is credible, especially since all groups (which includes individuals, state institutions, and corporations) are required by law to have direct ties to China’s only political party.

So that’s it then? It’s all bunk? Not quite. While there are plenty of reasons to doubt information coming out of China, there are also reasons to buy what CAAM is selling.

Since COVID-19 originated in China, its market was expected to enter into recovery before other regions gained the opportunity. As businesses reopened and lockdowns orders eased, customers could have flocked to dealerships to make up for lost time. CAAM’s numbers also mimic what’s being reported by some manufacturers. Volkswagen’s top dog in China, Stephan Wöllenstein, recently said that his businesses saw an improvement:

“We are witnessing an outstanding economic comeback. In late winter, the whole of China was effectively in lockdown. Now, by early summer, we can look forward to a return to normal in the country’s car market. In April, Volkswagen Group China’s deliveries were even able to grow compared to the previous year.

This comeback was made possible by a joint effort from customers, government and the automotive industry. We have left the deepest valleys behind us, and are now on the climb to the peaks again. After a total market downturn of 80 [percent] in February, 40 [percent] in March, and an April around 10 [percent] down, we are returning to normality. However, the big question is if the second half of the year will make up the dent of loss in the first half. Should the current trend continue, we at Volkswagen Group China can be cautiously optimistic and forecast a yearly result that is not so far away from our original plan. Looking back at the beginning of the year, this might seem like a miracle, but it was made possible by an incredible team effort.”

Frankly it does seem like a miracle. However it’s one that has been echoed by Zhejiang Geely Holding Group (which gained 2 percent in April) and SAIC Motor’s joint venture with General Motors, according to The Wall Street Journal. Unfortunately, they’re the outliers. Meanwhile, local governments started offering cash subsidies of as much as $1,400 per vehicle to encourage sales. We haven’t a clue of how many people are actually included in those stimulus plans.

The China Association of Automobile Manufacturers noted that its data was provisional and subject to change. Last month’s modest improvement over April 2019 could ultimately end up being a loss — another reason we’re hesitant to call this a comeback. We also know some Chinese factories are still contending with supply hiccups caused by prolonged shutdowns, meaning we’ll probably have to watch recovery efforts for a while before coming to any conclusions.

Still, it’s encouraging to see any market progressing back to normalcy. Even if CAAM’s numbers are fudged, it’d be unlikely that it could attempt to do so by any gigantic margin without someone noticing. China’s auto sales are almost assuredly improving, but beating last year’s figures seems like an incredibly optimistic assessment. Again, we’re waiting to see if the outlet revises its figures after the passage of time.

[Image: OLOS/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Redapple Redapple on May 07, 2020

    This China Plague is real bad -everywhere.

    • See 11 previous
    • Civicjohn Civicjohn on May 11, 2020

      @el scotto El- My cyber friend, why are you unleashing so much vitriol? You may have forgot that the CCP tossed out The Washington Post and The NY Times, right? It’s somewhat ironic. With regards to having a discussion about the topic, well, the article is not about just a specific model. No need to get so bent.

  • Inside Looking Out Inside Looking Out on May 07, 2020

    Our idiot Governor Newsom, I call him Gavin Nuisance LOL, refused to buy masks from American manufacturers and instead paid billion $$ to BYD which did not deliver. Of course Chinese screwed him. Yeah, now lets make him president - he passed the test.

    • See 1 previous
    • TMA1 TMA1 on May 08, 2020

      China is trying to trick the whole world into bending the knee for domestic propaganda purposes. nypost.com/2020/05/07/china-gave-europe-coronavirus-supplies-in-exchange-for-praise/

  • NJRide So this is an average age of car to be junked now and of course this is a lower end (and now semi-orphaned) product. But street examples seem to still be worth 2500? So are cars getting junked only coming in because of a traumatic repair? If not it seems a lot of cars being junked that would still possibly worth more than scrap.Also Murilee I remember your Taurus article way back what is the king of the junkyard in 2024?
  • AMcA I applaud Toyota for getting away from the TRD performance name. TuRD. This is another great example of "if they'd just thought to preview the name with a 13 year old boy."
  • Jeff Does this really surprise anyone? How about the shoes and the clothes you wear. Anything you can think of that is either directly made in China or has components made in China likely has some slave labor involved. The very smart phone, tablet, and laptop you are using probably has some component in it that is either mined or made by slave labor. Not endorsing slave labor just trying to be real.
  • Jeff Self-driving is still a far ways from being perfected. I would say at the present time if my car took over if I had a bad day I would have a much worse day. Would be better to get an Uber
  • 2manyvettes Time for me to take my 79 Corvette coupe out of the garage and drive if to foil the forces of evil. As long as I can get the 8 track player working...