Vehicle sales in China surged 25 percent in February, the first gain in four months, after a series of stimulus policies on auto consumption by the government since the end of last year.
Sales of passenger vehicles, buses and trucks climbed to 827,600 units, according to statistics released by China Association of Automobile Manufacturers (CAAM). Auto sales in the first two months rose 2.7 percent to 1.56 million, compared with a 39 percent decline to 1.35 million in the U.S.
China has halved purchase taxes on small-displacement cars and released a subsidy of ¥5 billion ($725 million) to vehicles sold in rural areas to revive auto demand, after automobile sales rose at the slowest pace in a decade last year.
Combined with the country’s ¥4 trillion economic stimulus package and the newly released Automotive Industry Readjustment and Revitalization Plan, the policies have caused General Motors to roughly double its forecast for China’s nationwide automobile market growth this year.
“Consumers are regaining confidence because of the government stimulus policies,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai. “Still, vehicle sales may fluctuate in the coming months.”
Sales in March will likely be rather high, Xiong Chuanlin, deputy secretary-general of CAAM, told reporters in Beijing. The body is “cautiously optimistic” about full-year sales, he added.
The February sales jump, the biggest in 18 months, was also helped by an earlier Chinese Lunar New Year holiday, according to Cui Dongshu, deputy secretary-general of China National Passenger Vehicle Association. The weeklong break was in January this year.
Sales of cars, MPVs and SUVs posted 614,776 units in February, up 26.22 percent year-on-year, according to CBU-Autostats.
China’s vehicle output hit 850,000 units in February, the highest in seven months, according to the country’s top industrial official.