Return of consumer confidence to drive car sales higher in 2021

THE China Passenger Car Association said yesterday that the country’s sales of passenger cars are expected to rise 7 percent in 2021, amid growing momentum and improving consumer confidence.

There are a number of positive factors which will drive sales growth next year, including government policy stimulus, sales promotion during festivals and strong potential of new-energy vehicles.

“Sales growth is driven by government policy to promote auto consumption to ensure stable economic growth after the COVID-19 epidemic and has been proved to be effective based on the situation this year,” said Cui Dongshu, secretarygeneral of the association.

The association said the demand for online shopping has increased amid the COVID-19 pandemic. Sales of medium and heavy trucks have posted rapid growth, thanks to the convenience of online shopping.

After the COVID-19 outbreak, the country has adopted a series of policies to prevent the spread of the virus and stabilize growth and quickly promoted the rapid resumption of production and work, which has had a positive impact on the overall automobile market.

Local governments have encouraged buying by issuing consumer vouchers and relaxing purchase restrictions for cars.

The association also cited reasons such as sales promotions and festivals for the rebound. It said that the Spring Festival of 2021 will lead to fast growth in sales. The association expects sales growth of around 60 percent compared with the same period in 2020.

Cui added that the production capacity of the auto market in 2020 has been affected to a certain extent. In particular, the production and sales of some joint venture companies did not reach a high level. They are subject to some supply and production constraints. In 2021, the release of restricted production capacity will further promote the growth of the auto market.

On November 15, a mega free trade agreement involving 15 countries in the Asia-Pacific region was formally signed, a timely and inspiring move that will not only create new momentum for regional cooperation but facilitate global post-pandemic economic recovery, the association said.

Benefiting from this agreement, China’s auto companies can look forward to opportunities in overseas markets, which can reduce the cost of auto parts and components and given them a greater market share in those markets. It is expected that auto exports will see good sales growth next year, which will contribute to growth of the overall auto market.

In 2020, China’s NEV market has also seen rapid growth. The annual sales of new-energy passenger vehicles exceeded 1.15 million units, which is expected to be slightly higher than the sales in 2019. In 2021, sales of NEVs is expected to maintain its good momentum.

The association’s Cui said: “We are optimistic about the sales growth of China’s auto market in 2021, but there are still some challenges ahead, including uncertainties in the overseas environment and a decline in buying activities among young generation.”