Auto purchase restriction likely to be relaxed in China to boost consumption

China unveils guidelines to boost domestic consumption, including the possible relaxation or cancellation of the automobile purchase restriction policy amid the year-long slide in auto sales.    

Local governments of regions where the automobile purchase restriction policy has been implemented shall be encouraged to gradually relax or cancel the specific measures of buying limitation based on respective actual situations, the State Council's General Office said in the Guidelines on Accelerating the Circulation Development and Promoting Commercial Consumption.

This was raised as part of the suggestion about further unleashing China's domestic potential of automobile consumption amongst a continuous gloom for the entire market.

As of July, 2019, China's automobile market had been hit by the 13th-month-in-a-row downturn in sales and outputs. For the first seven months, a total of 14,132,000 vehicles were sold across this country with a year-on-year decline of 11.4%, according to the China Association of Automobile Manufacturers (CAAM).

“Purchasing new energy vehicles (NEVs) should be given active supports in eligible regions,” said the authority.

The CAAM's statistic showed that China's automakers sold roughly 699,000 NEVs through July, an impressive jump of 40.9% from the prior-year. However, primarily affected by slash in NEV subsidy, the country posted the first-time downturn in July in terms of its monthly NEV sales.

As a result of the sliding sales in July, the association reduced its NEV sales forecast for 2019 to 1.5 million units from 1.6 million units.

The Chinese government in March announced a series of cuts to new energy vehicles subsidies, which have been instrumental in boosting the rapid sales growth that has made China the largest NEV market in the world since 2015.

In June, the last month before the new stricter NEV subsidy policy were implemented, Chinese automakers sold around 152,000 NEVs with a surge of 80%, as consumers scrambled to take advantage of the discounts.

“To boost the circulation of used cars, we shall further implement the policy of fully cancelling the restriction on the movement of used cars,” the agency added.

For the first half of 2019, China's used vehicle sales volume reached 6.862 million units, growing 3.93% from the year-ago period. During the same period, the country's sales from pre-owned car transaction amounted to RMB433.6 billion, a year-over-year increase of 5.16%, according to the statistics from the China Automobile Dealers Association (CADA).