CAR sales in China retreated in June following a rare increase the previous month, signaling the world’s biggest auto market is facing a bumpy recovery from a two-year slump worsened by the coronavirus pandemic.

Retail sales of sedans, SUVs, minivans and multipurpose vehicles declined 6.5 percent to 1.68 million units in June from a year earlier, the China Passenger Car Association (CPCA) said yesterday. Sales had risen 1.9 percent in May, the first increase in a year.

The decline is a setback for an industry betting that demand will return as the pandemic eases in China and showrooms and malls reopen. Yet the economy is still recuperating, and the auto industry’s long-term challenges remain: ride-hailing apps are reducing the need for personal ownership, and fast-developing new technologies such as electrified motors may be prompting some buyers to put off purchase decisions.

Last month, the industry faced a particularly tough year-earlier comparison: Sales jumped in June 2019 as dealers offered discounts to push models that risked becoming redundant by new emission standards taking effect the following month.

Premium marques such as BMW and Mercedes-Benz have emerged from the slump quicker, helped by demand from wealthier consumers, while cheaper local brands have been hit. In the mid-tier of the market, performance has varied: Nissan Motor Co.’s sales rose 4.5 percent last month in China while Honda Motor Co.’s fell by 4.1 percent. China’s Geely Automobile Holdings Ltd. had a 21 percent sales surge.

The industry’s full-year sales may fall about 10 percent following big declines at the height of the virus crisis early in 2020, CPCA secretary general Cui Dongshu said in April. That would be a third straight annual drop.

Sales of new energy vehicles (NEV), which include battery electric vehicles and plug-in hybrid and hydrogen fuel cell vehicles, hit 85,600.

Pure battery electric vehicle sector sold 67,000 units in June with U.S. maker Tesla Inc. accounting for 23 percent of the market, the CPCA said.

Tesla sold 14,954 Shanghai-made Model 3 vehicles in China in June, up 35 percent month on month, according to the CPCA.

Cui said the association expects NEV sales in the second half this year to be significantly higher than in the same period last year.(SD-Agencies)