Market bounces back sharply in April

Retail sales of new passenger vehicles in China, including sedans, crossovers, SUVs and multi-purpose vehicles, jumped 56 percent to 1.63 million in April, the China Automobile Dealers Association said on Tuesday. 

The surge reflects a rebound from the same month last year, when Shanghai, China’s largest city and auto production hub, was locked down to contain a new way of coronavirus infections. 

In April, sedan sales advanced 50 percent to some 791,000 while multi-purpose-vehicle deliveries spiked 71 percent to around 95,000.

The volume of crossovers and SUVs also rallied 60 percent to roughly 744,000.

Due to weak demand in the first quarter, sales of new passenger vehicles in China through April slid 1.3 percent to below 5.9 million.

Demand for electrified vehicles remained robust in April, with retail sales of full electric and plug-in hybrid passenger vehicles surging 86 percent to around 527,000. The tally was composed of some 370,000 EVs and 157,000 plug-in hybrids, a jump of 74 percent and 122 percent, respectively, from a year earlier.

Through April, some 1.84 million EVs and plug-in hybrids were delivered across China, an increase of 36 percent. 

In the period, EV sales rose 20 percent to roughly 1.26 million while plug-in hybrid deliveries rallied 92 percent to around 580,000. 

China's crowded auto market is getting even more congested with nearly 300 models displayed at the Shanghai auto show in April, 172 of which were NEVs, according to Ways Consulting.

After more than 40 auto brands this year joined a price war started by Tesla and slashed prices on their best-selling models, more consumers are choosing to delay purchases in anticipation of bigger discounts on the cars, the China Passenger Car Association has said

The U.S. EV giant has since reversed course, raising prices in markets including China in May.

The price increase by Tesla could help drive consumers to purchase, fearing more price hikes or simply taking a wait-and-see approach, thus stabilizing the overall market, Cui Dongshu, secretary general of CPCA, told a media briefing on Tuesday.

China's post-COVID economic recovery has mostly benefited spending on services like restaurants and travel, while sales of big ticket items like cars and smartphones have continued to slump.

A tepid property market recovery and an unexpected contraction in factory activity is also pointing to a shaky economic outlook, casting clouds over the strength of the post-COVID rebound and potentially dampening consumer spending.

Reuters contributed to this report.