Passenger vehicle sales in China fell for the fifth straight month in August, according to industry data released on Monday. However, sales of all-electric and plug-in
hybrid vehicles surged, boosted by government subsidies for drivers trading in older, more polluting vehicles.
Total vehicle sales in August declined by 1.1% year-on-year to 1.92 million units, a slight improvement from the 3.1% drop recorded in July, as per data from the China Passenger Car Association (CPCA).
In contrast, sales of new energy vehicles (NEVs), including electric and plug-in hybrid models, soared by 43.2%, representing a record 53.5% of total car sales. Local EV leader BYD set new sales records, while Tesla posted its strongest performance of 2024 in China.
Car exports also saw a significant boost, rising by 24% in August following a 20% increase in July.
The continued decline in overall sales reflects weakening consumer confidence, with first-time car buyers falling behind those trading in older vehicles, according to the CPCA.
Chinese drivers trading in petrol-powered vehicles for NEVs are eligible for cash subsidies of up to 20,000 yuan ($2,823), while those opting for smaller-engine petrol alternatives can receive up to 15,000 yuan.
To address declining consumer spending, domestic EV manufacturers like Nio and Xpeng introduced lower-cost brands earlier this year. Over 80% of those applying for trade-in subsidies chose to purchase NEVs, according to CPCA Secretary General Cui Dongshu.
Despite the recent drop in monthly sales, year-to-date figures show a 1.6% increase in car sales for the first eight months of 2024. Cui expects sales to remain positive for the year, largely driven by government incentives supporting NEV purchases. He also projected that NEV sales would make up close to 50% of total domestic car sales in 2024, surpassing that milestone in 2025.
However, the surge in NEV sales has not been enough to offset broader challenges in the automotive market. Many dealerships have faced difficulties due to falling prices, with more than half of them posting losses in the first half of the year. The China Automobile Dealers Association reported a 7.3 percentage point increase in the number of loss-making dealerships compared to the same period last year.
One notable casualty is China Grand Automotive Services, the country's second-largest dealership, which was delisted from the Shanghai Stock Exchange in August after its stock traded below par value for 20 consecutive days. Photo by Navigator84, Wikimedia commons.
