China may be the largest vehicle market in the world, but it is certainly not growing. The China Passenger Car Association (CPCA) reported that 19.29 million passenger cars were sold in the huge Asian country in 2020, about 7% below the number for 2019. This represented the third consecutive annual decline from the 2017 peak of 23 , 8 million.
Although the industry was affected – as many were – by the economic consequences of the coronavirus pandemic, the outbreak had subsided mainly in China in the last months of the year. Reflecting this, the country’s GDP grew at decent rates in the second and third quarters, after falling almost 7% in the first quarter.
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With the momentum expected to raise the economic indicator in 2021, the CPCA expects a very different dynamic for 2021. “This year you will see much stronger growth”, Wall Street Newspaper quoted CPCA Secretary General Cui Dongshu as saying.
Certain top-down and bottom-up factors are expected to contribute to such an increase. RECENTLY, the Chinese government has extended the subsidies it provides to buyers of ELECTRIC vehicles (EVs) in an effort to increase its proportion in overall car sales.
At the same time, a specific disruptor Tesla Motors (NASDAQ: TSLA) this month it hit the market with its locally produced Model Y SUVs.
With a starting price of 339,900 yuan ($ 52,438), they are cheaper than the premium internal combustion SUVs on the market, such as the Audi Q5 and BMW X3. Tesla is not a novelty in China, but the very attractive price of the Model Y and the prestige of its brand (not to mention EVs) should result in healthy sales, helping to stimulate the general market.
On Tuesday, Tesla’s share price rose 4.7%, improving the day’s S&P 500 index.