China to see sluggish auto market in H2 despite subsidy on energy-saving cars
Monday, August 02, 2021 10:30 AM

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BEIJING, Aug. 2, 2010 (Xinhua News Agency) -- The sluggish auto market performance may continue in the second half of this year, despite the government's subsidy for the purchase of energy-saving cars.

On June 1, the Ministry of Finance, Ministry of Science and Technology, Ministry of Industry and Information Technology, and the National Development and Reform Commission jointly issued a statement to promote energy-saving cars.

In a joint document, they said the government will grant a one-off 3,000 yuan subsidy for purchase of every gasoline or diesel fueled passenger vehicle that has a displacement of less than 1.6 liters and whose general fuel consumption is about 20 percent lower than the existing standard.

The new policy took effective as from July 1. At that time, the market expected that the subsidy policy would provide a strong boost to the gloomy auto market.

However, a month after implementation, the auto market was still in slack performance, as the inventories of automakers are stacking up and some automakers have not fully implemented the subsidy policy.

In view of the slack sales and rising inventories, auto distributors have begun to cut auto prices to attract more customers.

According to statistics compiled by the National Development and Reform Commission (NDRC), China's auto prices dropped 0.36 percent in June from the beginning of this year. The price of the passenger cars in June fell nearly 3.09 percent from the beginning of this year.

A report by the National Bureau of Statistics showed that the Business Climate Index for the auto industry in the second quarter of this year dropped 0.1 points from the previous quarter. The Confidence Index of automakers also fell 2.1 points from Q1.

In addition, consumers complained that some distributors did not fully implement the subsidy policy. This to some extent hindered the auto sales.

As for the market performance in the second half of this year, analysts predicted that the auto prices will go down slightly in H2, due to the increase in the supply of new types of cars, and distributors' sales promotions.

More than 20 types of new cars will be introduced to the market in H2, which will intensify the oversupply on the market, said analysts.

Officials from the NDRC recently said that the commission will soon publish the catalog listing the second batch of energy-saving cars. And it will publish lists of more batches after that.

China plans to promote over 400 billion yuan of energy-saving cars consumption. It means that the sales of energy-saving cars will reach 1.3 million units annually in the next three years, on average. (Edited by Jiang Yujuan, jiangyj@xinhua.org)

 

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