BEIJING--China's auto market grew for a fourth straight month, driven by strong stimulus from the government and a robust recovery in demand for commercial vehicles.
Sales in China rose 16.4% in July compared with a year earlier to 2.11 million vehicles, the government-backed China Association of Automobile Manufacturers said Tuesday.
Since May, the world's largest auto market has been recording year-over-year sales growth in the low double-digit percentages, as Beijing eases restrictions and offers favorable policies and subsidies in a bid to revive the economy and boost spending.
CAAM maintained its forecast for a decline of 10% to 20% in sales this year, but warned China's exports and supply chain could suffer if a another wave of coronavirus was to hit in fall and winter.
Nissan Motor Co. said last week that its sales in China increased by 11.6% in July compared with a year earlier. SAIC Motor Corp., China's biggest car manufacturer by sales, said last week that its domestic July sales rose 4% from a year earlier.
CAAM tracks the vehicle wholesale market, and warned Tuesday that car dealers should pay attention to inventories, which swelled 11.6% last month. Retail demand was weaker in July, industry groups suggested, as consumers piled into the rising stock market and delayed auto purchases in hopes of more stimulus and subsidies coming from central and local governments.
"Car dealers are facing increasingly intense pressure to cut prices in the second half in order to meet their yearly targets," the state-backed China Automobile Dealers Association said last week, based on a survey of auto dealerships nationwide.
Sales of new-energy vehicles, including electric cars, rose 19.3% last month from a year earlier to 98,000 vehicles, CAAM said, marking the first month of growth in one year.
Tesla Inc. sold 11,014 China-made Model 3s in the country in July, according to China Passenger Car Association data.
The Chinese government is relying on electric vehicles to drive new demand, particularly in lower-income rural areas. The coronavirus has dented consumer sentiment and disrupted the operations of ride-hailing companies, who are major buyers of electric vehicles.
Beijing last month rolled out a new campaign to encourage electric vehicles, endorsing more than a dozen models of electric cars produced by Chinese auto makers and encouraging local governments and car makers to promote them in small cities and towns, with the help of subsidies. The government also vowed to develop a network of charging facilities covering China's rural areas, as a part of a larger economic campaign to build up "new-style infrastructure."
The Ministry of Industry and Information Technology will ease restrictions and offer other supportive policies in an effort to support ailing electric-vehicle makers hit by the pandemic.
Alibaba Group Holding Ltd.-backed electric car maker XPeng Inc. said Friday that it has filed to list its shares in New York, after the debut of rival Li Auto Inc., backed by Tencent Holdings Ltd., on the Nasdaq Stock Market last month.
Raffaele Huang contributed to this article.
Write to Jonathan Cheng at jonathan.cheng@wsj.com
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