The Chinese new-vehicle market expanded significantly in June after anti-pandemic measures were lifted and tax incentives became widely available, with wholesale volume jumping 24 percent to nearly 2.5 million following steep declines in May and April.

The market rebound was driven by deliveries of new light vehicles, which surged 41 percent to top 2.2 million last month, data from the China Association of Automobile Manufacturers released on Monday show.

The sales surge came after Shanghai — China’s financial center and industrial hub — lifted a two-month lockdown and the central Chinese government rolled out temporary tax incentives for gasoline vehicles on June 1. 

Under the incentive program, vehicle purchase taxes were halved to 5 percent for new gasoline new light vehicles with engine sizes of up to 2.0 liters and priced at 300,000 yuan ($44,709) or below.

In June, the market for new commercial vehicles including buses and trucks remained in a steep downturn amid a slowing national economy, with shipments plunging 37 percent to roughly 281,000.

In the first six months, new-vehicle sales industrywide dropped 6.6 percent to 12.06 million. During the period, light-vehicle sales gained 3.4 percent to 10.36 million while commercial-vehicle shipments slumped 41 percent to 1.7 million.

Electrified vehicles

Electrified-vehicle sales continued to grow strongly, with June sales spiking 129 percent to some 596,000. Shipments of full electric vehicles and plug-in hybrids industrywide jumped 120 percent and 170 percent to around 476,000 and 120,000 last month. 

In the first half, overall EV sales rallied 115 percent from a year earlier to about 2.6 million. 

Forecast

The trade group now expects the overall new-vehicle market in China in 2022 will expand 3 percent to roughly 27 million, as provincial governments across the country start subsidizing sales of new light vehicles. 

It earlier expected sales to grow 5.4 percent to 27.5 million in 2022.

Weak demand for commercial vehicles, such as buses and trucks, drove the downgrade, data from the association showed. It now expects a 16% fall in sales of commercial vehicles to 4 million units.

Overall growth of around 3% compares with the 4.4% achieved in 2021 and the 1.9% fall of 2020.

Light-vehicle sales this year will grow 7 percent to about 23 million while commercial-vehicle shipments will slip 16 percent to about 4 million, according to a forecast CAAM released on Monday.

The trade group also expects annual sales of new electrified vehicles will advance 56 percent to around 5.5 million this year.

The auto industry still faces persistent challenges of chip shortages and rising raw material costs, especially for electric-vehicle batteries, said Chen Shihua, deputy secretary-general of the association.

Reuters contributed to this report.