China’s auto sales in 2022 rise 9.5%, but growth is slowing

China’s auto sales rose 9.5% last year as electric vehicle purchases nearly doubled, but demand in the global industry’s biggest market collapsed in December, pointing to weaker growth this year, a trade group reported on Thursday.

Sales of SUVs, sedans and minivans rose to 23.6 million, according to the China Association of Automobile Manufacturers. Total vehicle sales, including trucks and buses, rose 2.1% to 26.9 million.

December sales fell 6.7% year-on-year to 2.3 million as consumer spending slacked under pressure from anti-virus restrictions keeping millions of people at home and an economic slowdown brought on by tighter government controls Corporate debt weakened. Total vehicle sales fell by 8.4% to 2.6 million.

CAAC forecast steady growth for this year, but said annual sales could rise just 3%.

The economy is recovering after the ruling Communist Party’s surprise decision to lift anti-virus controls on travel and business. However, the recovery is expected to be rocky as China copes with a surge in infections and weaker US and European demand for its exports.

Global automakers are eyeing China to drive sales growth at a time when demand in the US and Europe is flat to falling.

The World Bank and private sector forecasters have lowered their forecasts for China’s economic growth last year to as low as below 3%. The International Monetary Fund expects a rebound to 4.4% this year, but that would still be one of the lowest levels in three decades.

Sales of gasoline-electric hybrids and pure electric vehicles increased 93.4% to 6.9 million in 2022, according to CAAC. Pure electric vehicle sales rose 81.6% to 5.4 million vehicles, while hybrid vehicle sales rose 160% to 1.5 million.

Sales of petrol- and diesel-powered vehicles fell 25.3% to 1.3 million in December.

China accounts for more than half of global electric vehicle sales. The ruling party subsidized the industry’s launch to get an early head start in an emerging technology, but has since shifted the financial burden to automakers by imposing sales quotas. They invest trillions of dollars in developing models that Chinese drivers want to buy without subsidies and have formed partnerships to share the rising costs.

EVs accounted for 25.6% of vehicle sales, CAAC said.

China’s annual auto sales peaked at 24.7 million in 2017 but plummeted to 20.2 million in 2020 after dealerships closed as part of efforts to contain COVID-19. Since then they have gradually recovered.

Sales of Chinese brands grew 22.8% to 11.8 million in 2022, accounting for 49.9% of the market, according to CAAC. Revenue rose 12.7% year over year to 1.3 million in December.

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