July Car Domestic Sales Decline Slows in Major Countries... "Liquidity Support and Domestic Demand Stimulus Measures Urgently Needed"

[Asia Economy Reporter Kiho Sung] In July, the decline in domestic automobile sales in major countries appeared to have eased. However, it is expected that more time will be needed until global demand fully recovers, highlighting the need for liquidity support and domestic demand stimulation measures.

The Korea Automobile Manufacturers Association announced on the 3rd that sales in July this year in the Americas, Europe, and Asia all showed a slowdown in the year-on-year decline, and except for China and France, sales in July this year increased compared to June this year in all countries.

In particular, China, the United Kingdom, and France showed year-on-year sales growth in July this year, while Germany, Italy, the United States, and Japan still experienced a decline compared to the previous year. However, the decline rate, which was between -30% and -20% in June, decreased to around -10% in July, confirming a continuous reduction in the decline.

In the United States, the gradual reopening of the economy and stable oil prices, and in Brazil, the easing of social distancing and factory restarts since May, have led to a slowdown in the decline in sales. Additionally, in Germany, France, and Italy, demand rebounded thanks to domestic demand promotion policies such as expanded subsidies for electric vehicle purchases, temporary reductions in value-added tax, and support funds for replacing old vehicles.

In Asia, China continued to drive demand with local government subsidies for automobile purchases and increased sales of commercial vehicles such as buses and trucks due to the government's active expansion of infrastructure investment. In Japan, demand recovery has been gradual after the emergency declaration was lifted, due to reduced worker income and the impact of the 2% consumption tax increase in 2019, which dampened consumer sentiment. In India, despite the ongoing spread of COVID-19, operations resumed after May, and sales in July for some major companies recovered to the previous year's level.

Jung Manki, Chairman of the Korea Automobile Manufacturers Association, stated, “It is fortunate that global automobile demand is showing signs of recovery. However, considering the two-month lag between delivery and payment causing ongoing liquidity crises for parts suppliers, and the insufficient domestic production for both domestic and export markets, it is necessary to continue resolving liquidity difficulties until global demand fully recovers. Furthermore, additional domestic demand stimulation measures, such as a 70% reduction in the individual consumption tax on automobiles, should be promptly prepared.”

This content was produced with the assistance of AI translation services.