Chinese Passenger Vehicle Sales Decline for Fifth Consecutive Month
Passenger vehicle sales in China experienced a decline of 1.1% in August 2024 compared to the same period last year, dropping to 1.92 million units, according to industry data from the China Passenger Car Association (CPCA). This marked the fifth consecutive month of sales decline, with the previous month recording a 3.1% drop.
Surging New Energy Vehicle Sales
Amidst the overall decline, new energy vehicle (NEV) sales witnessed a remarkable surge of 43.2%, accounting for a record-breaking 53.5% of total car sales. This growth was primarily driven by the dominance of domestic EV champion BYD and a strong performance from U.S.-based Tesla, which achieved its best monthly sales in 2024.
Government Incentives Drive NEV Popularity
The Chinese government’s generous subsidy program for drivers trading in polluting vehicles for NEVs and smaller-engine alternatives has played a significant role in boosting NEV sales. Drivers are eligible for subsidies of up to 20,000 yuan ($2,823) and 15,000 yuan, respectively.
Declining Consumer Confidence and Dealership Struggles
Despite the incentives, the overall decline in car sales reflects waning consumer confidence, as evidenced by a higher proportion of trade-ins compared to first-time car purchases. The impact of this trend is felt by dealerships, with over 50% reporting losses in the first half of 2024, a 7.3 percentage point increase compared to the same period in 2023. China’s second-largest dealership, China Grand Automotive Services, was even delisted from the Shanghai bourse due to prolonged stock undervaluation.
Positive Outlook for Full-Year Sales
CPCA remains optimistic about full-year car sales, anticipating continued growth in NEV sales supported by government incentives. “We expect sales for the full year to remain in positive territory,” said CPCA secretary general Cui Dongshu. Cui also projects that NEV sales will approach 50% of domestic car sales this year, crossing that milestone in 2025.
Challenges for Dealerships
While rising EV and plug-in hybrid sales have helped dealers, they have also presented challenges due to ongoing price declines. The CPCA data shows that dealerships are battling falling prices, contributing to their financial struggles. Despite these challenges, the Chinese automotive industry continues to evolve, with a focus on fostering NEV adoption and addressing the concerns of dealerships. The government’s ongoing support for the NEV sector is expected to drive further growth in this segment, shaping the future of China’s automotive landscape.
