China's November Retail Sales: Strong Performance in Automobiles and Home Appliances Amid Broader Market Challenges

Preview

In November 2024, the Chinese retail market showed mixed performance, with notable strengths in the sales of automobiles and home appliances.

Preview

Preview

Automobiles

The automotive sector experienced robust growth, with overall vehicle sales reaching 3.316 million units, representing an 11.7% increase year-on-year. This growth was driven by a combination of factors, including the government's trade-in policy and continued consumer interest in new energy vehicles (NEVs). Specifically, NEV sales continued to rise, although the penetration rate of NEVs at retail dipped slightly to 52.3% in November, after being above the 50% mark for several months. The sales of gasoline vehicles also saw faster growth rates, incentivized by the trade-in policy.

Home Appliances

Home appliance sales also performed well, supported by the government's ongoing trade-in program, which has significantly boosted consumer spending. Retail sales of household appliances and audiovisual equipment increased by 22.2% year-on-year in November. This surge in sales was particularly notable in urban regions, where retail sales of these items grew by 10.5%. The trade-in scheme has been particularly effective in driving sales of smart home appliances, such as robotic vacuums and dryers, which saw a 200% year-on-year growth.

Overall Retail Sales

Despite the strong performance in automobiles and home appliances, the broader retail market showed a lackluster performance. Retail sales of consumer goods grew by only 3% year-on-year, falling short of market expectations of 5%. This slower growth was primarily due to declines in the sales of non-essential goods, such as apparel, jewelry, beverages, and tobacco. Cosmetics sales, for instance, experienced a sharp contraction with annual growth plummeting to -26.4%.

Preview

Economic Context

The overall economic performance in November was mixed. Industrial production grew by 5.4% year-on-year, slightly exceeding market expectations, reflecting continued support for high-tech manufacturing. However, the slowdown in retail sales highlighted the pressing need for the Chinese government to strengthen measures aimed at boosting consumption. The Central Economic Work Conference recently announced significant adjustments to economic priorities, emphasizing consumer demand as the top priority for the coming year. This includes more proactive fiscal policies and a focus on raising the deficit ratio to stimulate economic growth.

In summary, while the automotive and home appliance sectors showed strong growth in November 2024, the broader retail market faced challenges, with slower-than-expected sales in non-essential goods. The Chinese government's trade-in policies have been a key driver of growth in these sectors, and further fiscal and monetary measures are expected to support continued economic recovery.