China New Car Sales Crash 37% In 4th Week Of June

June does not appear to be shaping up to be the month where Chinese auto sales "bounce back". Dealing with recessionary headwinds pre-Covid, the world's largest auto market has been decimated by the effect of the pandemic and doesn't look to be leading the world to any type of meaningful recovery any time soon.

Overnight the China Passenger Car Association said that retail car sales were down 37% YOY for the 4th week of June.

Average daily sales were down to 51,627 during June 22-27. This is a 6% sequential fall from the same week in May, indicating little respite or improvement from the pressure of the coronavirus pandemic on the industry. PCA blamed "seasonal factors" for the drop, which is a funny way to say "Chinese-borne virus ravaging the entire planet". 

This also paints an ugly picture for June's new car sales number, since we reported about 3 weeks ago that the first week in June was also off to an ugly start. In that article, we noted that retail car sales fell 10% year over year - but more importantly 20% from the same period in May - in the first week of June.

June's interim data comes after what looked like the beginning of a rebound for the industry in May, to the extent that we can trust the numbers coming out of Beijing. This news comes despite better than expected results in May, where sales showed a 12% increase year over year. 

According to The Detroit Bureau, premium and luxury passenger car retail sales led the charge in May, rising 28% last month compared with year-ago results. Those vehicles accounted for 1.61 million of the month's 2.14 million vehicles sold.

The China Association of Automobile Manufacturers, or CAAM, had predicted an 11.7% jump for May, including commercial vehicle sales in its results. Predictions for June look ominous: the CPCA has said that June sales will decline in part because June 2019 was such a strong month for the industry.

Meanwhile, the Chinese government is attempting to spur demand with new policies aimed at enticing buyers, according to Bloomberg, citing an unnamed automotive industry group in China. 

Recall, we have recently noted that U.S. auto manufacturers are also teeing up sizeable incentives to get buyers back into showrooms. Europe is following suit, with Volkswagen starting a sales initiative to revive demand, including improved leasing and financing terms. 

Outlook for the year in China remains less-than-optimistic. The CAAM predicts that sales will drop 15% to 25% for the year, depending on whether or not the country is able to further slow the spread of the virus.

June's full retail vehicle sales data should be available in days.