What’s new: China’s passenger vehicle sales are losing momentum during the first half in a turbulent market, plagued by weakening consumers sentiment and a brutal price war.
Car sales during the first six months totaled 9.5 million units, rising only slightly by 2.7% from a low point a year ago when strict Covid controls disrupted sales. The figure is 4.1% lower than the same period in 2021, according to data released by the China Passenger Car Association (CPCA).
In June, the country sold 1.91 million vehicles, down 2.9% from last year, CPCA data showed.
The weakening sales reflected the expiration of some policies aimed at incentivizing auto purchases that ended last year and a price war that disrupted the market, said the CPCA.
Highlights: Despite sluggish domestic sales, China’s auto exports and home-grown electric vehicle brands have seen strong performance during the first half.
The market share of home-grown brands reached 50% in the first half, expanding 4.2 percentage points from a year ago, CPCA data showed.
Last week, Stephen Dyer, Asia head of consulting firm AlixPartners, said that annual sales of Chinese car brands in the domestic market will exceed overseas brands for the first time in 2023, predicting the share of domestic brands will reach 65% in the China market by 2030.
New energy vehicle sales in China increased 37.3% in the first half to 3 million units, according to CPCA. Meanwhile, China’s passenger car exports surged 92% in the first six months to 1.68 million units.
The context: Initiated by Tesla Inc. late last year, China’s auto market was rattled by a brutal price war as automakers raced to the bottom to offer steep discounts to lure buyers in a slowing market.
Weak demand in China partly stemmed from the impact of the pandemic and from expectations that car prices would continue falling.
As the price war wanes and automakers adjust inventories, the market is likely to stabilize in the third quarter, said the CPCA.
Contact reporter Han Wei (weihan@caixin.com)
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