Data released on February 11 showed that car sales in China in January declined by 12% compared to the same period last year, marking the first drop since September last year and the largest decrease in nearly a year.
According to the data from the China Passenger Car Association (CPCA), the retail sales of passenger cars in China in January were 1.794 million vehicles, a 31.9% decrease from December last year.
Among them, sales of electric cars and plug-in hybrid vehicles (collectively referred to as new energy vehicles) increased by 10.5% year-on-year, accounting for 41.2% of total sales. This is the second consecutive month that new energy vehicles have failed to surpass the sales of gasoline cars.
The CPCA predicts that by 2025, sales of new energy vehicles will account for 57% of total car sales, up from 47% last year.
January is typically a slow season in the Chinese auto market, with the period before the Lunar New Year usually being the peak season. Many car buyers hope to drive home in a new car for the Lunar New Year.
A spokesperson for the CPCA stated, “The peak car-buying period before the Lunar New Year has traditionally been a peak season in rural areas, with demand mainly coming from first-time buyers, and gasoline cars account for a larger proportion.”
Due to the shift in the timing of the Lunar New Year, passenger car sales usually experience significant fluctuations in the two months prior to it. This year, the Lunar New Year fell in January, while last year it was in February.
The data from the CPCA shows a significant decrease in production for luxury cars and joint venture brands, while sales of Chinese domestic brands have increased.
In January, production of luxury brands decreased by 17% compared to January 2024, joint venture brands saw a 13% decrease in production, and domestic brands saw a 16% year-on-year increase in production.
Recent data released by Honda China shows that in January this year, Honda’s car sales in China were less than 68,900 vehicles, a 31.7% decrease from January 2024.
The CPCA data also indicates a subdued start for car exports, with January showing a 3% increase compared to January 2024, reaching 380,000 vehicles, a slower growth rate than the 6% in December.
Analysts point out that due to car manufacturers rushing to meet annual sales targets at the end of 2024, and consumers eager to take advantage of government subsidies announced before the subsidy extension, some of the demand for 2025 may have been released earlier.
Despite the subsidy extension, it is expected that car sales in the Chinese market will slow down this year, with electric car giants like BYD entering their third year of price wars.
BYD on Monday reduced the starting price of electric cars equipped with advanced autonomous driving features to 70,000 yuan, much lower than competitors such as Tesla.
Tesla in China has extended discounts and financing incentives, while Xiaopeng and NIO have followed suit, offering zero-interest financing for up to five years for some models.
(This article is based on reports from Reuters and Autohome)