China wages 'big war' to bolster car sales in world's biggest vehicle market

  • It may soon be the best time ever to buy a car in China because in a bid to bolster sales, discounts and subsidies are being planned on a large scale.
File photo used for representational purpose. (REUTERS)
File photo used for representational purpose.

There is a flutter that is fast developing into a worry in the world's largest vehicle market. All is not well in China which is also the world's largest electric vehicle (EV) market. Demand for new vehicles is on the rise but the pace of this rise is a mere shadow of the momentum it has had in the past. And the efforts to add a catalyst are being taken up on a war-like scale.

Demand for passenger vehicles rose by 7.3 per cent in May from April but while this is a positive move, it is still far from the giddy highs seen in earlier times. A big factor could be the slow pace in demand rise for EVs in the aftermath of subsidies being done away with. Sales of fully-electric and plug-in hybrid models rose only by 41 per cent between January and May of this year, far slower than the 120 per cent growth observed in the same period of 2022. Little wonder then that the focus on EVs is being brought back to add a booster dose.

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The country's Ministry of Commerce is spearheading a six-month-long campaign to accelerate demand for cars, including EVs. The primary area of focus is on offering subsidies and discounts on passenger vehicles. EVs could once again benefit the most as the Chinese government is looking to promote adoption of such products in the rural parts of the country. There are also efforts to help improve infrastructure in the hinterlands to ensure that EV purchases can be further encouraged.

Also Read : China sells more light vehicles than US, India, Japan & Germany combined

But in all of this, the end potential customer is looking for the most value and as such, discounts and subsidies are expected to be flowing freely once again. The eastern Chinese city of Nanjing has already announced a plan to 35 million yuan ($5 million) in car consumption vouchers. This translates to around 5,000 yuan (approximately $700 or 58,000) for each qualifying car purchase. Shenzen will also provide around 82 million yuan to consumers who bought clean cars this year.

Even car companies are looking to step out and bat big. Hongguang Mini EV, an extremely popular model from the joint venture between GM, SAIC Motor Corp. and Wuling Motors Holdings has had a 13,000 yuan (approximately 1.50 lakh) discount. Chery Automobile Co. has announced lifetime free service for some of its EVs, along with discounts on purchase costs.

(With inputs from Bloomberg)

First Published Date: 09 Jun 2023, 11:26 AM IST

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