Beijing [China], September 11: Like the real estate market, China’s automotive sector is experiencing a significant revenue decline. Vehicle sales dropped for the third consecutive month in August, reflecting ongoing economic challenges.
Data released on Tuesday shows that domestic demand for passenger and family cars has weakened due to poor consumer spending. Total vehicle sales, including exports, saw a 5 per cent year-on-year decrease, now standing at 2.45 million units, Nikkei Asia reported.
The China Association of Automobile Manufacturers (CAAM) revealed that domestic passenger car sales fell by 9.4 per cent, totaling 1.74 million units. Citing the CAAM data, Nikkei Asia emphasized how the slump in consumer confidence is playing a central role in the downturn.
To counteract these trends, the Chinese government is offering subsidies aimed at encouraging new car sales and replacing older vehicles. However, these incentives have not been enough to reverse the drop in sales. Gasoline-powered vehicle sales took a dramatic hit, falling by 34.1 per cent to just 795,000 units.
This decline is indicative of a larger trend in the market, with electric vehicles and hybrids slowly gaining more traction. At the same time, commercial vehicle sales also suffered, dropping 20.9 per cent, leaving the total at 198,000 units.
The dip in commercial vehicle sales is closely tied to poor investment in infrastructure construction and the deteriorating real estate sector, which has become a major drag on the overall economy. The reduced construction activity directly impacts the demand for commercial transport, leading to lower sales, reported Nikkei Asia.
On another front, the China Evergrande New Energy Vehicle Group (CENEVG), an electric vehicle unit of the larger Evergrande Group, is facing severe financial troubles. The company is undergoing bankruptcy proceedings and has entered into talks with potential buyers. The situation has only worsened, as creditors are now seeking repayment of massive debts.
A Chinese court recently heard an application from creditors claiming heavy financial losses, further complicating Evergrande’s financial standing. Liquidators are pursuing billions of dollars from key Evergrande executives, including the company’s founder, Hui Ka-Yan.
The struggles of Evergrande’s electric vehicle arm highlight the broader financial instability in China’s property development sector, adding to the woes of the country’s economic outlook.
