China car sales up 34% on April but still weaker than last year

SHANGHAI (Reuters) -Chinese retail car sales data for May has added to a picture of a grinding economic recovery from severe anti-pandemic measures, with manufacturers selling more vehicles than last month but still fewer than a year before.

Releasing the data late on Wednesday, the China Passenger Car Association called for more government support.

Retail sales in the first three weeks of May, 780,000 vehicles, were up 34% on the same period in April. But, with measures to control COVID-19 outbreaks depressing incomes, the sales volume was 16% lower than 12 months earlier, the industry association said.

Movement and social activity was heavily restricted in cities across China last month. Rules vary from place to place but have been eased where they were strictest, such as Shanghai.

Automobile sales in the first quarter were 0.2% higher than a year before. For 2021, sales were up 3.8%.

The picture of a grinding and only partial economic recovery that appears in automobile sales is also seen in other near-real-time indicators.

Road freight transportation and express delivery from distribution centers last week were both stronger than a month earlier but still down sharply on last year, Nomura Global Economics said.

The passenger car association said stimulus measures from local governments would provide only short-term support for the market. It urged authorities to adopt stronger policy to put the industry back on track for sustainable recovery.

China’s policymakers have been in talks with automakers about extending costly subsidies for electric vehicles that were set to expire in 2022, aiming to keep a key market growing as the broader economy slows, Reuters reported earlier this month.

Sales of electric vehicles and plug-in hybrids have been the fastest-growing segment of China’s market, and an area where established global brands, such as General Motors (NYSE:) and Volkswagen (ETR:), have trailed local companies by a wide margin.

Chinese electric vehicle maker Xpeng (NYSE:) is accelerating deliveries after resuming double-shift production in mid-May at its plant in the southern city Zhaoqing, the chairman of the company, He Xiaopeng, told analysts this week. Supplies of parts to the plant had recovered thanks to containment of COVID outbreaks in the region, He said.

Tesla (NASDAQ:) also managed to add a second shift at its Shanghai plant on Thursday, heading towards making 2,600 cars daily, according to a person familiar with the matter.

Tesla didn’t immediately reply to a request for comment.