SHANGHAI, Dec 9 (Reuters) – China’s auto sales are likely to rise 3% to hit 27.6 million in 2023, the country’s top auto industry body said, expecting economic recovery to offset such negatives as rising COVID-19 infection.
Of the total, sales of new-energy vehicles (NEVs) are likely to grow 35% to 9 million, Xu Haidong, deputy chief engineer at the China Association of Automobile Manufacturers (CAAM), said in an online briefing on Friday.
The association saw downward pressures on the sector next year, including slowness in recovery in consumer confidence and a slump that could be expected to follow expiry of government incentives at the end of 2022.
It called for an extension until at least 2023 for the incentives – a cut in purchase tax on combustion-engine vehicles and various local-government subsidies. The China Passenger Car Association made the same request on Thursday.
Automakers and investors are bracing for a downturn in the market as the economy sags, but CAAM said it expected increased government support would sustain economic recovery next year.
Beijing started easing pandemic controls this week after public frustration boiled over into protests at the end of November. Large-scale COVID infections would have an “adverse influence” on the auto market next year, CAAM said.
Sources at two Western carmakers with factories in China told Reuters on Friday they were monitoring the situation on the ground carefully.
One was worried the virus would spread quickly as restrictions ease, increasing the likelihood of staff sickness and potentially hurting output.
Another said the situation was “unpredictable”, with the relief this week at reopening potentially turning out to be shortlived.
CAAM’s data showed the industry sold 2.33 million vehicles in November, 7.9% fewer than in the same month of 2021, as a hoped-for buyers’ rush before expiry of the incentives failed to appear.
November was the first month since May to show an annual fall. The result compared with a 6.9% rise in October.
Sales of NEVs, which include purely electric, plug-in hybrid and hydrogen fuel-cell vehicles, were 72.3% higher in November than a year before.
Many of China’s pandemic restrictions were still in place last month. One of their effects has been to disrupt production.
Total auto sales in the first 11 months of the year were 3.3% higher than in the same period last year, CAAM data showed.
In July, CAAM lowered its growth projection for 2022 to 3% from 5.4% previously.
Previous months’ data had shown the incentives were having a waning effect. (Reporting Zhang Yan and Brenda Goh; Additional reporting by Bernard Orr and Victoria Waldersee Jan Schwartz and Christina Amann in Berlin; Editing by Bradley Perrett and Mark Potter)