China's car sales rise 2.1% in April as price war effect fades

CHINA’S passenger vehicle sales rose by 2.1 per cent in April from a month earlier, industry data showed, underscoring a slower pace of growth as the stimulus effect of price cuts and incentives faded.

Car sales in April totalled 1.65 million units, 54.5 per cent higher from a year earlier when Covid-19 lockdowns disrupted productions and sales, the China Passenger Car Association (CPCA) said on Tuesday (May 9).

In the first four months of 2023, vehicle sales were down 1.4 per cent year-on-year to 5.98 million units, it added.

Sales of new energy vehicles (NEVs), which include pure battery electric cars and plug-in hybrids, skid 3.6 per cent on a monthly basis in April and accounted for 32 per cent of total car sales in the month, CPCA data showed.

BYD sat atop the segment with 37 per cent market share, while Tesla had a 7.6 per cent share.

China’s crowded auto market is getting even more congested with nearly 300 models displayed at the Shanghai auto show in April, 172 of which were NEVs, according to Ways Consulting.

After more than 40 auto brands this year joined a price war started by Tesla and slashed prices on their best-selling models, more consumers are choosing to delay purchases in anticipation of bigger discounts on the cars, CPCA said in previous notes.

The US EV giant has since reversed course, raising prices in markets including China in May.

China’s post-Covid economic recovery has mostly benefited spending on services like restaurants and travel, while sales of big ticket items like cars and smartphones have continued to slump.

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A tepid property market recovery and an unexpected contraction in factory activity is also pointing to a shaky economic outlook, casting clouds over the strength of the post-Covid rebound and potentially dampening consumer spending. REUTERS