The news on vehicle sales is indicative of the growing economic headwinds. Data published by the China Association of Automotive Manufacturers showed auto production down 12.4% in the first half of the year in what is the world’s largest car market. Chinese auto production in 2018 was down 4% to 27.8 million units, the first time since 1990 that the country’s car sales have contracted on an annual basis.
June sales for passenger cars were up, but this has been attributed to dealers offering big discounts to reduce inventories of vehicles that do not meet new exhaust emissions standards introduced from July in 17 Chinese cities and provinces.
In contrast, China’s New Energy Vehicles (NEV) faired far better. NEV sales last year were up 79% at 1.1 million NEV passenger cars plus 60,000 light commercial vehicles. According to data from EV-Volumes, this made up 4.2% of new sales in the light vehicle sector. The first half of 2019 saw total sales of 633,000 NEVs and an average market share of 6.3%.
The depressed state of the conventional auto market, but sustained buoyancy in NEV sales means the latter’s market share is higher than it otherwise might have been.
NEV sales in China for the remainder of the year are expected to fall foul of much-reduced subsidies to manufacturers, particularly for models with smaller batteries and shorter ranges. The subsidy reduction from July is also likely to have inflated first-half sales.