New Delhi

The Chinese automotive market experienced a downturn in July, with overall sales decreasing by 5 per cent compared to the same period last year, according to data released by the China Passenger Car Association. This decline was particularly pronounced in the domestic market, where sales of passenger vehicles dropped by 10 per cent year-on-year, totalling approximately 1.6 million units. However, this downturn was partially offset by a significant increase in exports, which rose by about 20 per cent to reach 399,000 units.

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The total number of passenger cars sold in July, including both domestic sales and exports, amounted to roughly 2 million units. A notable trend within these figures is the growing prominence of new energy vehicles (NEVs), which include both electric vehicles (EVs) and plug-in hybrids. These eco-friendly options now account for more than half of all vehicles sold in China.

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In response to the sluggish domestic demand, the Chinese government has implemented measures to stimulate sales. These initiatives include expanding incentives to encourage consumers to trade in their older, conventional fuel vehicles for newer, more environmentally friendly EVs.

Despite the overall market slowdown, the EV sector demonstrated robust growth. Sales of EVs surged by nearly 30% in July compared to the previous year, reaching approximately 991,000 units. 

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Of these, 887,000 were sold within China, while 103,000 were exported. This growth in the EV market stands in stark contrast to the performance of traditional combustion engine vehicles, particularly those produced by foreign automakers, which have seen stagnant or declining sales in the face of intense price competition in an oversaturated market.

Chinese automakers have been steadily increasing their market share, which now stands at two-thirds of all vehicle sales in July. This represents a 10 per cent increase in sales for domestic brands, highlighting their growing dominance in the Chinese automotive landscape.

The report also provided insights into consumer preferences regarding vehicle pricing. The majority of vehicles sold in China between January and July fell within the price range of 100,000 to 150,000 yuan (approximately USD 14,000 to USD 20,500). For EVs specifically, the most popular price bracket was slightly higher, between 150,000 and 200,000 yuan (USD 20,500 to USD 28,000).

In terms of exports, traditional automakers such as Chery Automobile, SAIC, and Geely continue to lead, with a focus on conventional fuel engine models. However, EV manufacturers like BYD and Tesla are rapidly gaining ground in the export market. In July, BYD exported 31,000 EVs and hybrids, while Tesla's exports totalled 28,000 units. Looking at the first seven months of the year, BYD has exported 2.38 million EVs, outpacing Tesla's 1.76 million units.

The export data also revealed interesting geographical trends. Russia emerged as the largest importer of Chinese-made vehicles in the first half of the year, receiving 478,000 units, most of which were conventional internal combustion engine vehicles. Mexico ranked second with 226,000 imports, followed by Brazil with 171,000 units.

This comprehensive overview of the Chinese automotive market in July 2024 highlights the complex dynamics at play, including the shift towards EVs, the growing dominance of domestic brands, and the increasing importance of exports in offsetting domestic market challenges. It also underscores the ongoing transition in the global automotive industry towards more sustainable transportation options, with China playing a pivotal role in this transformation.