Market growth will slow in 2023 as economy cools, CAAM predicts

China’s new light-vehicle market will notch lower growth in 2023 amid a slowing national economy and lingering chip shortages, the China Association of Automobile Manufacturers predicts. 

The trade group said Friday it expects industrywide sales to increase 1.3 percent next year after growing 9.4 percent in 2022.

According to CAAM’s projection, industrywide sales of new sedans, crossovers, SUVs, multi-purpose vehicles and minibuses will increase to 23.8 million in 2023 from 23.5 million this year.

To avoid a rapid slowdown in the market, it is urging the government to extend tax incentives for fuel-powered vehicles in 2023, CAAM said.

On June 1, the Chinese government halved the purchase tax to 5 percent for fuel-powered vehicles with engine sizes of up to 2.0 liters and priced at 300,000 yuan ($43,041) or below.

The tax cut was intended to stimulate the market after a sharp contraction from April to May, when Shanghai, China’s largest city and auto production hub, was locked down amid a severe coronavirus outbreak. 

Largely because of the tax incentives, which are set to expire at the end of December, light-vehicle shipments across China rose 12 percent to exceed 21.3 million in the first 11 months of the year.