China's Car Market Sees Decline in Auto Sales But Electric Vehicle Exports Surge

China's auto sales declined by 5% in July year-on-year despite a significant rise in electric vehicle exports. Passenger car sales reached about 2 million, with 1.6 million sold domestically. Government incentives aim to boost sales of electric vehicles, which saw a 30% increase. Chinese automakers are gaining market share.

Auto sales in China took a downturn in July, slipping 5% compared to the same period last year, the China Passenger Car Association reported. However, exports experienced a 20% jump as electric vehicle manufacturers expanded internationally.

A total of about 2 million passenger cars were sold, with 1.6 million sold within China, marking a 10% drop. Meanwhile, exports soared by over 20% to 399,000 units. More than half of all vehicles sold were new energy vehicles, including electrics and plug-in hybrids.

In an effort to stimulate demand, the government has increased incentives for trading in older gas and diesel cars for electric vehicles. Despite sluggish overall sales, EV sales in July surged nearly 30% from the previous year, reaching around 991,000 units. Within this figure, 887,000 EVs were sold domestically and 103,000 were exported.

The intense price competition in an oversaturated market has led to stagnant or declining sales for foreign automakers. By contrast, Chinese automakers captured two-thirds of the market with a 10% increase in sales. Most vehicles sold in the first seven months were priced between 100,000 to 150,000 yuan (approximately USD 14,000 to USD 20,500).

Chinese companies like Chery Automobile, SAIC, and Geely are still leading in vehicle exports compared to EV specialists like BYD and Tesla, but the latter are quickly gaining ground. July saw BYD exporting 31,000 EVs and hybrids, while Tesla exported 28,000 units. In the first seven months, BYD led with 2.38 million exports, followed by Tesla with 1.76 million.

The majority of China's auto exports were destined for Russia, with 478,000 units imported in the first half of the year, mostly conventional engines. Mexico and Brazil followed with 226,000 and 171,000 imports respectively.

(With inputs from agencies.)