Auto sales in China showed little growth in March compared with the same period last year, according to data released by the China Passenger Car Association (CPCA).
Passenger car sales stagnated at 1.61 million units, while sales in the first three months fell 13.4% to 4.33 million.
Figures for new energy vehicles (NEVs), including battery electric cars and hybrids, were much more promising, with sales up 21.9% in March and 34% of total sales for the month .
BYD maintained a significant lead in the NEV segment with a 35.5% market share, with Tesla in second place with 14% of NEV sales in China.
Data released on Monday also showed that April vehicle sales may see a strong recovery after a low base in the corresponding period last year.
The coronavirus pandemic hit the auto industry hard, with China imposing strict COVID-19 lockdowns on major cities in April 2022. The pandemic has contributed to a drop in vehicle sales figures traditional with an internal combustion engine (ICE).
NEV prices have been declining rapidly due to discounting and reduced battery costs, putting more pressure on ICE vehicles and the legacy brands behind them.
Tesla started a price war this year, which led more than 40 other brands to lower their prices on ICE models to defend their market shares. Companies like Nissan, Toyota and Volkswagen have joined the race and recently offered significant discounts to customers.
Local authorities who see the car industry as a key pillar of the economy have rolled out subsidies to buyers to encourage demand, some of which have been extended to carmakers to stimulate manufacturing.
Despite the bright outlook for NEVs, the global electric vehicle (EV) market has struggled recently.
The research shows that 672,000 units were sold in January 2023, almost half of December 2022 sales and only a 3% year-on-year increase from January 2022. Among all passenger cars, electric vehicles’ market share it fell to 14% in January, notably lower than December’s 23%.
In China, the world’s largest electric vehicle market, sales of electric vehicles in January fell 50% compared to December a year earlier. However, the year-on-year change remained relatively stable due to consumer affinity for cheaper domestically manufactured models.
As a result, the China Association of Automobile Manufacturers expects a slowdown in sales momentum this year, forecasting a figure of around 8 million electric vehicles.
Sales for the first quarter of 2023 are expected to remain sluggish. Still, CATL’s announcement of a battery price cut for car buyers will likely boost sales again.
The auto industry continues to show positive signs of growth despite recent setbacks. The declining cost of NEVs, competition for consumer attention with attractive discounts and government incentives are contributing to a healthier market.
Brands that want to survive in the competitive Chinese auto industry must keep up with technological advances in a challenging economic climate.
By Michael Kern for Oilprice.com
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