On June 8th, the China Passenger Car Market Information Association (hereinafter referred to as "CPD") released recent data showing that in May, the retail sales volume of passenger vehicles reached 1.609 million units, increasing by 12.6% month-on-month and 1.8% year-on-year. The China Passenger Car Association (CPD) stated that, excluding the factor of the "dumping" of National V emission standards in June last year, May this year marked the first time since June 2018 that the year-on-year growth rate returned to positive growth year-on-year.

Source: China Passenger Car Association

Since the public health event, the growth rates of passenger vehicle retail sales from January to May this year have been -20%, -78%, -40%, -3% and 1.8% respectively. "Currently, the auto market only returns to the normal trend of previous years in May, and the recovery speed of retail sales shows a distinct and relatively fast feature." " Cui Dongshu, the secretary-general of the China Passenger Car Association, said that the possibility of another sharp decline in sales is not high.

The China Passenger Car Association pointed out that the retail sales growth rate in May this year was 12.6% compared with that in April, while the growth rate in May was basically the same as that in April in previous years. The month-on-month strengthening in May this year reflects the good effect of comprehensive policies such as resumption of work and production after the epidemic in guiding the market recovery, and the continuous recovery of basic demand after the epidemic. As the epidemic eases and students in various regions gradually return to school, the demand for car purchases and replacements from families continues to be released, driving the auto market to keep strengthening. In addition, the gradual implementation of consumption promotion policies in various regions has significantly improved consumer confidence after the epidemic.

In terms of manufacturer rankings, the top five manufacturers in terms of the comprehensive sales volume of narrow passenger vehicles are FAW-Volkswagen, SAIC-Volkswagen, SAIC-GM, Geely Automobile and Dongfeng Nissan. Among them, FAW-Volkswagen achieved a year-on-year growth of 22.8%, with sales reaching 182,000 units. Saic Volkswagen, the second place, saw a year-on-year decline of 10.4%. Additionally, Geely Automobile's sales volume in May increased by 24.7% year-on-year. The performance was quite outstanding.

In terms of market segments, luxury cars and SUV models remain the main engines driving the growth of the automotive market. According to data from the China Passenger Car Association, in May, SUV sales rose by 13.7% year-on-year to 759,000 units, luxury car sales increased by 28% year-on-year, sedan sales dropped by 4.8% year-on-year to 766,000 units, and MPV sales declined by 22.4% year-on-year to 84,000 units.

In May, the wholesale sales volume of new energy passenger vehicles was 70,200 units, a year-on-year decrease of 25.8% and a month-on-month increase of 19.5%. Among them, the sales volume of plug-in hybrids was 14,000 units, a year-on-year decrease of 31%. The wholesale sales volume of pure electric vehicles was 56,000 units, a year-on-year decrease of 27%, while that of ordinary hybrid passenger vehicles was 29,000 units, a year-on-year increase of 52%.

(Image source: Baidu

During the same period, Tesla's (TSLA.US) sales in China increased by 205% quarter-on-quarter to 11,095 units, ranking first in the new energy vehicle sector. New car-making forces such as NIO (NIO.US) have also become important forces in the new energy vehicle market. Cui Dongshu said that Tesla's strong product power has gained recognition from many domestic consumers, and the products of new car-making forces have also been recognized by high-end consumers simultaneously.

Regarding the forecast for the auto market sales in June, Cui Dongshu believes that although the possibility of another sharp decline is not high, due to the large base caused by the switch from National V to National VI standards last year, and June is also a traditional off-season, it is still very difficult to achieve positive growth.

The China Passenger Car Association (CPA) stated that the current main feature of the auto market is the differentiation between high-end and low-end models. In May, entry-level consumption in the auto market remained weak, and demand for models priced under 80,000 yuan was sluggish. Luxury cars saw a year-on-year growth of 20% in May. Domestic brands are under relatively greater pressure to perform, which is also a feature that the purchasing power of first-time home buyers has not yet been fully reflected. The China Passenger Car Association suggests that short-term direct market stimulus policies should target first-time home buyers and encourage those without cars to consume, such as preferential purchase tax for small-displacement vehicles.