Sales forecast bright as policies lend more confidence to buyers

Manufacturers rush to tempt customers through promotions as annual market deadlines loom

Vehicle sales in China are expected to continue their momentum in the fourth quarter, as customer enthusiasm is fueled by favorable policies from the central government and local authorities.

"Thanks to the policies, we expect sales to grow fast and total sales this year will be more than in 2021," said Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers.

Deliveries over the first three quarters of this year reached 19.47 million units, up 4.4 percent year-on-year. The growth rate from January to September was 2.7 percentage points higher than in the January-August period, said the CAAM.

China has been rolling out a slew of policies aimed at stimulating the automotive sector's growth.

The State Council has halved the purchase tax for the large majority of gasoline models since June 1. The policy will expire by the end of this year.

Market observers said potential car buyers are expected to purchase before the expiry of the policy, which can save them thousands of yuan at volume brands like Volkswagen and Toyota.

Sales of new energy vehicles are expected to see a surge as well in the fourth quarter. Subsidies that have been in place since 2019 are to finish by the end of this year, the observers said.

NEVs have been a growth engine of China's car market. Their sales reached 4.57 million units in the first three quarters of this year, up 110 percent year-on-year. They accounted for almost a quarter of total vehicle deliveries in that period, according to statistics from the CAAM.

The CAAM estimates that NEV sales this year are to reach 5.5 million units, which would mark a 56 percent rise from 2021.

But NEVs, including electric vehicles and plug-in hybrids, which are exempt from the purchase tax this year, will be eligible for the zero-purchase tax policy in 2023 as well, said the Ministry of Industry and Information Technology in late September.

Earlier this month, North China's Shanxi province announced that it has earmarked 100 million yuan ($13.83 million) as subsidies for those who purchase passenger vehicles between Sept 1 and Nov 30.

Local authorities in Tianjin, North China, issued an additional 20,000 license plates earlier this month for those who failed to win theirs in the city's license lottery system over the past five years.

Ding Wen, a telecom engineer in Tianjin, was one of the winners. He said he is comparing several hybrid models from Toyota and Great Wall Motors, but has not yet made up his mind about which to choose. "But of course I will be a car owner by the end of this year," he said.

Carmakers are vying for buyers, with promotional campaigns being released one after another.

Last week, Tesla slashed the price of its popular Model 3 and Model Y vehicles in China, one of the company's most critical markets.

The starting price for the Model 3 sedan was reduced to 265,900 yuan from 279,900 yuan. The Model Y sport utility vehicle now costs 288,900 yuan compared to its previous price of 316,900 yuan.

Aito, a brand codeveloped by Huawei and Seres, is offering an 8,000 yuan insurance policy free of charge for new car buyers.

Startups Xpeng and Li Auto are giving out discounts on most models, ranging from 5,000-15,000 yuan, according to the China Securities Journal.

They have launched promotions to meet their sales targets and more are to follow suit, said analysts.

FAW-Volkswagen sold 1.35 million vehicles in the first three quarters. As one of the most popular carmakers in China, it reached 67.2 percent of its annual sales target by September.

The sales goal for Toyota's two joint ventures, FAW Toyota and GAC Toyota, was 1 million each. Yet they reached 70 percent and 60 percent respectively of their sales goals by the end of the third quarter.

China's BYD sold 1.15 million vehicles from January to September, up 162.2 percent this year. Its sales target is 1.2 million units.