China’s auto sales in May rose 14.5% from the same month a year earlier, industry data showed, the second consecutive month of increase as the world’s biggest vehicle market recovers from lows hit during coronavirus lockdowns.

The result followed a 4.4% rise in April and a 43% drop in March, when the pandemic pummelled demand. Before April, sales had suffered an almost two-year slump.

Sales in May rose to 2.19 million vehicles, showed data from the China Association of Automobile Manufacturers (CAAM), the country’s largest auto industry association.

Government support policies and improving consumer confidence contributed the May growth, said senior CAAM official Chen Shihua during an online briefing.

However, developments with the global pandemic might impact overseas demand for China-made vehicles, Chen said. In May, sales of new energy vehicles (NEVs) fell for an 11th month to 82,000 units, the data showed. NEVs include battery-powered electric, plug-in petrol-electric hybrid and hydrogen fuel-cell vehicles.

Automakers including Geely Automobile Holdings, Japan’s Toyota Motor Corporation and the United States’ Ford Motor reported positive China sales in May.

CAAM last month said annual auto sales could fall 15% to 25% due to, for instance, government restrictions on movement and business aimed at containing the novel coronavirus.

The outlook indicates challenges ahead as the industry works to emerge from the prolonged slump in demand, which was also exacerbated by a trade war with the United States.

Xu Haidong, another CAAM official, said the industry body now thinks China’s full-year auto sales will be better than expectations for a 15% fall. He did not elaborate. Meanwhile, new bank lending in China fell more than expected in May from the previous month but broader credit growth quickened as the central bank continues to ease policy to get the economy back on solid footing after the shock from the coronavirus crisis.

Reuters