China’s passenger vehicle sales fell in June, data from the China Passenger Car Association (CPCA) showed on Monday (Jul 10), as a stumbling economic recovery made consumers more cautious about big-ticket spending.

Car sales in June totalled 1.91 million units, down 2.9 per cent from last year, the CPCA data indicated. However, sales advanced 2.5 per cent to 9.65 million units in the first half of the year.

Meanwhile, sales of new energy vehicles (NEVs), including pure battery electric cars and plug-in hybrids, jumped more than 25 per cent in June and accounted for roughly 35 per cent of the total car sales. NEV sales surged more than 37 per cent to 3.09 million units in the first six months.

Both Tesla and rival BYD made record deliveries of their China-made vehicles in the second quarter, despite a hazy recovery for the sector.

Chinese carmakers counted more on overseas markets to sustain their sales growth, with car exports soaring 56 per cent in June.

However, Tesla’s share in China’s market of pure electric and plug-in hybrid cars fell to 8.8 per cent in the second quarter from 10.5 per cent in the first three months, according to Reuters’ calculation based on CPCA numbers.

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With domestic consumer demand weak, the world’s largest car market has been grappling with a price war triggered by Tesla in January that has since spread to more than 40 brands offering discounts on their vehicles.

While the price cuts initially boosted sales, the market’s recovery has been losing steam, prompting local authorities to roll out more buyer incentives, including purchase tax breaks for electric vehicles.

Two days after organising an industry-wide pledge to avoid “abnormal pricing”, the China Association of Automobile Manufacturers (CAAM) retracted on Saturday, citing antitrust law.

The joint pledge by 16 carmakers, including Tesla, BYD, Nio, Li Auto and Xpeng had been interpreted by some as signalling a truce in the price war that crippled industry earnings. REUTERS