Passenger Vehicle Sales in China

BEIJING (Reuters) – Passenger vehicle sales in China fell in August for the fifth straight month, industry data showed on Monday. However, sales of all-electric and plug-in hybrid models rose due to subsidies for drivers trading in more polluting vehicles.

Sales fell 1.1% from the same month a year earlier to 1.92 million vehicles, according to data from the China Passenger Car Association (CPCA). This decline was an improvement compared to a 3.1% drop in July.

New energy vehicle (NEV) sales, however, jumped 43.2%, accounting for a record 53.5% of total car sales. Local EV giant BYD (SZ:002594) set a sales record while Tesla (NASDAQ:TSLA) experienced its best month of 2024.

Car exports increased 24% following a 20% rise in July.

The numbers indicate waning consumer confidence, with first-time car purchases lagging behind trade-ins, as noted by the association last week.

Drivers can receive cash subsidies of up to 20,000 yuan ($2,823) when trading in petrol-powered cars for NEVs, while those trading in petrol cars for smaller-engine alternatives can get up to 15,000 yuan.

In response to a decrease in consumer spending, local EV leaders Nio (NYSE:NIO) and Xpeng (NYSE:XPEV) launched lower-priced brands earlier this year.

Over 80% of trade-in subsidy applicants opted to purchase NEVs, according to CPCA secretary general Cui Dongshu.

Despite recent declines, car sales were up 1.6% in the first eight months of 2024, CPCA data indicated.

Cui expects sustained government incentives to support NEV sales and anticipates that annual sales will remain positive. NEV sales are projected to reach nearly 50% of domestic car sales this year, with a likelihood of surpassing that threshold in 2025.

Rising EV and plug-in hybrid sales have not significantly alleviated the challenges faced by dealerships struggling with declining prices. More than half of dealerships reported losses between January and June, increasing by 7.3 percentage points from the previous year, according to the China Automobile Dealers Association.

The money-losing China Grand Automotive Services, the second-largest dealership, was delisted from the Shanghai bourse in August after its stock traded below par value for 20 consecutive days.

($1 = 7.0852 Chinese yuan renminbi)