The industry will sell 27 million cars this year, up 3% on 2021, the China Association of Automobile Manufacturers forecast, cutting its outlook from the 27.5 million sales and 5.4% growth it predicted in December

Weak demand for commercial vehicles was a factor in the downgrade, the association said at a regular press conference on Monday. It now expected a 16% fall in sales of commercial vehicles to 4 million units.

Overall growth of around 3% compares with the 4.4% achieved in 2021 and the 1.9% fall of 2020.

China’s auto sector has been hit hard in recent months by China’s efforts to combat COVID-19. The government has at times put many parts of the country, including Shanghai, under stringent lockdown.

Authorities are trying various incentives to revive the automobile market, with the central government last month halving purchase tax to 5% for cars priced at less than 300,000 yuan ($45,000) and with engines no larger than 2.0 litres.

That tax break has affected purchases of close to 1.1 million vehicles, bringing a tax loss of 7.1 billion yuan ($1 billion) for the government, the official People’s Daily said.

Many of the policies have been aimed at encouraging new-energy vehicle (NEV) sales. In May and June, some local governments started to offer subsidies to consumers willing to trade in gasoline vehicles for electric cars.