Passenger vehicle sales in China dropped for the fifth month in a row this August, reflecting a broader decline in consumer confidence. According to data from the China Passenger Car Association (CPCA), sales fell by 1.1% year-over-year, reaching 1.92 million vehicles. This follows a 3.1% drop in July.
However, the electric vehicle (EV) market showed robust growth. Sales of all-electric and plug-in hybrid models surged by 43.2%, accounting for a record 53.5% of total car sales. This increase was driven in part by government subsidies encouraging drivers to trade in petrol-powered cars for cleaner alternatives. Chinese EV leader BYD set a new sales record, while Tesla had its best month of 2024 in the Chinese market.
Car exports also grew, rising 24% in August after a 20% increase in July.
Despite the overall decline in car sales, new energy vehicle (NEV) sales remain a bright spot, boosted by incentives such as cash subsidies of up to 20,000 yuan ($2,823) for those trading in petrol vehicles for NEVs. Smaller-engine alternatives also qualify for subsidies of up to 15,000 yuan.
“More than 80% of drivers applying for trade-in subsidies chose NEVs,” said CPCA Secretary General Cui Dongshu.
While total car sales for the first eight months of 2024 are up 1.6%, consumer spending has slowed, with fewer first-time car buyers. To adapt, local EV makers like Nio and Xpeng have launched lower-priced models earlier this year.
Cui remains optimistic, projecting that NEV sales will continue to grow, accounting for nearly 50% of domestic car sales by the end of 2024 and surpassing that milestone in 2025. However, dealerships face challenges, with more than half suffering losses in the first half of the year. China Grand Automotive Services, the country’s second-largest dealership, was delisted from the Shanghai Stock Exchange in August after 20 consecutive days of trading below par value.
Despite these headwinds, industry experts expect government incentives to provide a steady boost to the NEV sector, keeping overall sales in positive territory for the year.
