China’s Auto Sales Grow for First Time Since 2017, Boosted by NEVs
The Chinese auto market is on the rise once again, with sales growing for the first time since 2017. This growth is largely attributed to the surge in sales of new energy vehicles (NEVs), which saw a remarkable increase of 1.5 times in 2021. Overall, the world’s biggest car market experienced a 3.8% year-on-year increase in sales, reaching a total of 26.28 million vehicles sold last year.
Despite facing challenges such as chip shortages and high raw material prices, the China Association of Automobile Manufacturers (CAAM) remains optimistic about the outlook for 2022. They anticipate that production and sales will improve this year, as these issues are expected to ease.
The Chinese auto market faced a downturn in 2018 due to various factors, including the phasing out of tax cuts, trade tensions between the US and China, and the impact of the COVID-19 pandemic. However, the market began to rebound in mid-2020, only to be hindered by a global semiconductor shortage that disrupted production worldwide.
While overall auto sales in China saw a slight decline in December, the sales of NEVs continued to shine. These vehicles, which include electric cars, plug-in hybrids, and fuel-cell vehicles, experienced a significant growth of 157.5% in 2021. In December alone, NEV sales surged by 114% year-on-year, reflecting the strong momentum in this segment.
Looking ahead, CAAM predicts a 5.4% increase in total automobile sales for 2022, with NEV sales expected to grow by 47% to five million units. The Chinese government has announced plans to reduce subsidies on NEVs by 30% this year and phase them out entirely by the end of the year, signaling confidence in the market’s ability to sustain growth independently.
While China’s EV market continues to thrive, foreign automakers have struggled to keep pace with their Chinese counterparts in terms of smart car design. Tesla remains the only foreign brand among the top ten in China, with the company achieving record sales of China-made vehicles in December.
Despite missing its sales target for the ID battery electric series, Volkswagen remains optimistic about doubling its sales this year. As the Chinese auto market continues to evolve and adapt to changing trends, it will be interesting to see how both domestic and foreign automakers navigate the shifting landscape.