China’s Automobile Market Forecast for 2023

China's automobile sales (substituted with factory shipment data) in the first 10 months of 2022 increased by 4.6% year-on-year to 21.97 million units. Full-year sales are expected to rise by 2.4% to 26.91 million units. In the first half of 2022, the new coronavirus infection spread again in some areas of China, so the “zero corona” policy with strict restrictions on movement was thoroughly enforced, resulting in a decline in automobile production and sales. Since June 2022, the automobile market has returned to a growth trajectory due to the Chinese government's reduction measures for passenger vehicle purchase tax and the automobile purchase support measures of some local governments.

The automotive market in 2023 is expected to grow slightly compared to 2022. There is a high possibility that the pandemic will come to an end on a global scale, so expectations for economic recovery are increasing. In China, from December 2022, the “zero corona” policy, which entailed strict restrictions on movement, was fully relaxed. As a result, business is expected to pick up, and expectations for an economic recovery in 2023 are increasing.

In the passenger vehicle market, the sales of medium- and large-sized passenger cars are expected to continue growing steadily, supported by consumption by wealthy people in urban areas. The large MPV market is also expected to continue expanding driven by rising demand for courtesy vehicles for businesses and by families. The SUV market, the largest segment, is likely to grow for the first time in four years since 2020. The A and B segments are forecast to continue to grow, pushed up by compact BEVs.

The commercial vehicle market in 2023 is expected to turn growth after two years decline in 2021 and 2022. Both the truck and bus markets are expected to expand compared to the previous year thanks to the restart of infrastructure construction aided by economic recovery, and the increase in demand in the tourism industry after the relaxation of corona restrictions on movement. However, the growth is likely to be limited.