China’s auto sales surged 14.5% in May, a second straight month of growth as the global industry’s biggest market gradually recovers from the coronavirus pandemic.

The China Association of Automobile Manufacturers said Thursday that sales of passenger cars jumped 7% from a year earlier to 1.67 million, an improvement over April’s 2.6% contraction.

Growth in passenger vehicles was primarily driven by sales of SUVs and minivans, which jumped nearly 20% and 47% respectively from the same period the year before.

Passenger vehicle sales tumbled 27.4% from a year earlier to 6.1 million in January-May, the CAAM said.

The industry has been hammered by the coronavirus pandemic and worries over the slowing economy and a possible revival of trade tensions with the U.S.

Sales plunged 81.7% in February at the height of the coronavirus outbreak, as dealerships and other businesses were shut down to contain outbreaks of the virus that have since largely subsided.

Prolonged weakness in a once sizzling market has hamstrung global automakers looking to China to drive revenue growth. Sales fell 9.6% last year, their second straight annual decline.

China’s government started reopening factories, restaurants and stores in March after declaring victory over the outbreak.

But rising job losses and fears of a second wave of coronavirus infections have left consumers wary of making big purchases.

The downturn is squeezing brands that are investing billions of dollars to develop electric vehicles under pressure to meet government sales targets.

May sales of battery-powered and gasoline-electric hybrid vehicles fell 23.5% from a year ago in May to 82,000. For the first five months of the year, sales slumped 38.7 % to 289,000.

Demand for electric vehicles weakened last year after Beijing reduced subsidies that helped to make China their biggest market, accounting for half of global sales. The government said in April it will extend subsidies through 2020 to shore up sales.

Following the announcement, Volkswagen said last month that it would spend 2 billion euros ($2.3 billion) to expand its presence in China’s electric car industry, by buying control of its electric car venture in China and investing in a battery producer.

By: DocMemory
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