China's car sales fall for 2nd month in July as price war continues

China's car sales fall for 2nd month in July as price war continues

Automotive News Europe — 2023-08-08

Automotive Industry

China's passenger vehicle sales fell for a second month in July 2023, as discounts and government support measures failed to persuade consumers wary of buying cars amid a sputtering economy and a prolonged slump in the housing market.

Automakers are concerned about a demand slowdown as the world's second-largest economy loses its post-pandemic bounce.

Car sales totaled 1.79m units in July 2023, down 2.6% from 2022, data from the China Passenger Car Association (CPCA) showed, the second contraction in a row after a 2.9% slide in June 2023.

Still, for the first seven months of 2023, sales were up 1.7% at 11.44m units.

Chinese automakers continued to bet on overseas markets, as domestic growth eased, with exports soaring 63% in July 2023 year-on-year following a 56% leap in June 2023.

Tesla, which is preparing its Shanghai plant for the new Model 3, exported 32,862 China-made cars in July, CPCA said.

Rivalries in China's automobile market, the world's largest, have intensified as automakers struggle with weakening demand, deepening price competition.

Price cuts triggered by Tesla at the start of the year have roped in 40-plus brands in China and have shown few signs of easing, with General Motors and Volkswagen Group joining a fresh round of cuts in July.

Automakers are expected to continue offering discounts for products in some segments and some of them may even ramp up discounting, said Cui Dongshu, the CPCA secretary general.

New energy vehicles (NEVs), which have underpinned China's auto sales growth, are also losing steam.

Sales of NEVs, which include pure battery electric vehicles and plug-in hybrids, were up 32% in July 2023, making up 36% of the total car sales. The segment recorded a 3.6% dip in sales in July 2023 over June 2023.

As part of efforts to revive sluggish consumer demand, authorities rolled out measures to boost auto consumption last month. In June 2023, they extended a purchase tax break on NEVs until 2027.

With 31,423 cars sold in China in July 2023, Tesla's market share in China's EV market fell to the lowest in nine months, according to a Reuters calculation based on CPCA data.