New energy passenger vehicles (NEV) retail sales are projected to hit about 700,000 units in the World’s largest auto market by the year’s end, based on China Passenger Car Association’s (CPCA) forecast on December 23.
CnEVPost reports that the projected 700,000 units represent a year-on-year increase of 47.4% from just 475,000 units and approximately 17% from November’s record of 598,000 units.
China Passenger NEV Penetration (Retail sales)
The CPCA predicts that retail sales will total 2.2 million units in December. Notably, that number represents a YoY increase of 4.5%.
That said, NEV penetration is projected to be slightly lower in December than in November at roughly 31.8% in retail sales. For reference, November’s record was 32.3%.
COVID-19’s influence on China’s Auto Market
The stringent COVID-19 prevention and control policies in China have hurt the automakers, which affected the overall market. Fortunately, these restrictions were loosened in December, allowing manufacturers to get their operations back on track.
In the first week of December, major automakers’ average daily retail sales decreased by 24% from the previous year. Thankfully, it improved in the second and third weeks by 5% and 18% YoY, correspondingly.
Given that the purchase tax incentives for both NEV and ICE vehicles are slated to expire by the year’s end, the growth trend should continue until the closing of December.
However, CPCA worries that consumer behavior is still influenced by the surge in COVID-19 in certain Chinese cities, which compels them to avoid trips and gatherings.
The CPCA warned that this could result in a lessened tailwind for the Chinese auto market by the year’s end. Furthermore, the CPCA also noted that the fifth week is anticipated to see flat average daily retail sales from a year earlier.
That said, NEV makers must step up their efforts to attract more customers in the upcoming year, despite the expiration of the purchase incentives. Hopefully, the Chinese government has plans to replace them to aid the promotion of NEV sales.
