A sharp decline in vehicle sales in China during January has raised the stakes for February as investors look to potential supply and demand in China’s electric vehicle market. The geopolitical background has also become larger factor after the Chinese spy balloon incident in February.
The China Association of Automobile Manufacturers reported that total vehicle sales in January fell 35% from a year earlier to 1.65 million units and also showed a slowdown from December.
Looking beyond the noise, Bank of America’s Ming Hsun Lee believes China’s auto market could see a partial recovery in February, with sales expected to post modest year-over-year and month-over-month growth.
It was noted that weak auto production and wholesale numbers in January were mainly dragged down by fewer business days due to the timing of the Lunar New Year holiday and initial demand in December due to the expiration of the subsidy for the purchase of electric vehicles and the policy to cut taxes on the purchase of ICEVs. “We expect car sales to gradually recover from February, driven by the recovery in demand due to China’s reopening and the local government’s incentive policies to support car sales,” Lee added.
Related AutoPlayers in China: Nio (NYSE:NIO), XPeng Inc ( XPEV ), Li Auto ( LI ), BYD ( OTCPK:BYDDY ) and Tesla ( TSLA ), Great Wall Motor ( OTCPK:GWLLF ), ( OTCPK:GWLLY ), Geely Automobile ( OTCPK:GELYF ), Toyota (TM), Volkswagen (OTCPK:VLKAF), Guangzhou Automobile Group (OTCPK:GNZUF), Wuling Motors (OTCPK:WLMTF), Nissan (OTCPK:NSANY), BAIC (OTCPK:BCCMY), Zotye, state-owned SAIC Motor, Beiqi Foton , Chery and Dongfeng Motor (OTCPK:DNFGY).
Chinese electric vehicle stocks rose in early trading on Monday despite rising U.S.-China tensions and concerns about a price war in the electric vehicle market. Li Auto (LI) was up 2.35%Nio (NIO) rose 1.55% and XPeng (XPEV) showed a gain of 3.22%.