China has set out a new plan to boost car sales – particularly new energy vehicles (NEVs) – to shore up its struggling post-Covid economy. The guidelines published by seven government departments, led by the Ministry of Industry and Information Technology (MIIT), set a target of selling around 27 million new vehicles this year, a 3% increase on the 2022 figure. In particular, it set a goal of increasing sales of electric cars to approximately 9 million units this year, a 30% increase. The plan describes the industry as a vital pillar of the economy, but warns that “international uncertainties and instability are increasing” and identifies the three main domestic pressures it is facing as “shrinking demand, supply disruption and weakened expectations”.
China, the world’s largest car sales market, saw 26.86 million units sold last year, up 2.1% year-on-year, according to the China Association of Automobile Manufacturers (CAAM). NEV sales reached 6.89 million units last year, an increase of 93.4%. The new plan also said tax incentives will be offered to boost sales of NEVs and more charging infrastructure will be created. It also calls on local authorities not to impose any further restrictions on car sales and encourages regions that impose quotas for the number of new cars that can be sold to increase the limit. The plan also sets out measures to increase exports, boost second-hand car sales, cultivate a “strategic alliance” of companies to safeguard the auto supply chain, and sets a goal of increasing the value of the car manufacturing industry this year by 5%. It will also support efforts to develop new technologies such as car chips, solid-state batteries, operating systems and high-precision sensors.
In July, the country’s exports of cars rose 35.1% from a year ago to 392,000 units while domestic sales declined 1.4% to 2.39 million units, according to the CAAM. Automobile industry profits dropped by 30% year-on-year in July. The plan is the latest in a series of efforts to revive the country’s economy, which is recovering slowly and risks missing Beijing’s annual growth target of 5% for this year. Other recent initiatives include a cut in the amount of funds institutions need to hold in foreign exchange reserves and more cities easing mortgage rules in a bid to arrest a property slump. Beijing has said that the country’s road to post-Covid economic recovery will not be smooth and will sometimes feature twists and turns. A 20-point package to boost consumer spending unveiled in early August prioritized efforts to get the country’s 1.4 billion population to splash out on big-ticket items such as houses and cars, the South China Morning Post reports.
