China’s widening gap between strong factory output and weak domestic demand is becoming increasingly pronounced in the automotive sector, where exports are offsetting slowing sales at home.
The country’s domestic car sales fell 21% in the first half of the year, while exports jumped 65.3%, according to data published on July 9 by the China Association of Automobile Manufacturers (CAAM).
HSBC lowered its forecast for China’s full-year passenger car demand growth from flat growth to a 5% decline, citing the end of some electric vehicle subsidies and collapsing demand for gasoline-powered cars as high oil prices accelerate the shift to electric vehicles.
“With domestic demand still subdued, exports remain an important support for utilization, earnings resilience and mix improvement,” HSBC analysts said.
All-electric and plug-in hybrid vehicles accounted for a record 46% of China’s car exports in the January-June period, up 12 percentage points from a year earlier.
