China auto sales fell 6.8% in 2020 but did better than expected in the pandemic-hit year and could to return to growth in 2021, according to one industry watchdog. Electric-car sales rose nearly 10%.
Automakers sold 19.29 million vehicles in 2020, marking a six-year low, the China Passenger Car Association, or CPCA, said. That came despite a 41% collapse in Chinese car sales in the March quarter, marked by pandemic lockdowns.
Including wholesale items, China auto sales for new vehicles dipped 1.9% to 25.27 million in 2020, China Association of Automobile Manufacturers, or CAAM, estimated.
“In Q1 we projected much, much worse,” IHS Markit auto analyst Lin Huaibin told The Wall Street Journal. CPCA expects sales to rise 7% in 2021 and to return to 2017’s peak volume levels around 2024.
China Auto Sales: Increase In Electrics
Sales of electric vehicles increased 9.8% to 1.11 million, CPCA said. That marked a rebound from 2019’s decline, with stronger growth seen this year. The nation targets China’s electric-auto sales to be 20% of all car revenue by 2025, up from about 5% today.
Chinese auto sales rebounded in the second half of 2020 as the government brought the pandemic under control. China also lavished incentives on the auto industry to support it, and made auto loans more widely available.
Luxury cars and electric vehicles drove the comeback. Despite a weak first quarter, Nio (NIO) more than doubled its electric-SUV sales in all of 2020. Similarly, Chinese EV peers Xpeng Motors (XPEV) and Li Auto (LI), as well as Tesla (TSLA), saw sales recover as the year progressed. For all of 2020, Mercedes-Benz maker Daimler (DDAIF) grew China sales nearly 12%.
Nio Stock, Other EV Stocks
Shares of Nio gapped up 10% to hit a fresh high, then trimmed gains to 63.42 in Monday’s stock market. The so-called Tesla of China impressed with the reveal of its first electric sedan and a longer-range new battery Saturday. Nio stock cleared a 57.30 cup-shaped buy point Friday and is now extended, meaning shares are not in buy range.
Among other EV stocks reporting China auto sales, Li Auto fell 3%, Xpeng lost 1% and Tesla shed nearly 4%. Tesla stock, which is on the IBD Leaderboard, is far extended from a 466 buy point. Daimler gave up 1.3%.
On Monday, Tesla scored a street-high price target of $900 from Bank of America. Analyst John Murphy at BofA cited the potential for “further equity raises to fund accelerated growth.”
Wedbush analyst Dan Ives calls China the “linchpin” of global EV demand. He expects Tesla to benefit in particular as growth comes in China auto sales, the world’s largest car market.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
YOU MAY ALSO LIKE: