China July car sales growth slows on weak hybrid demand, price war curbs

[SHANGHAI] China’s car sales growth slowed in July partly due to weaker demand for hybrids, as regulators in the world’s biggest auto market crack down on a price war that has bruised the industry.

Sales rose 6.9 per cent from July 2024 to 1.85 million cars, down from an 18.6 per cent year-on-year increase in June, data from the China Passenger Car Association showed on Friday (Aug 8).

Sales growth of new energy vehicles, including pure electrics and plug-in hybrids, slowed to 12 per cent from 29.7 per cent in June, but still outsold petrol cars for the fifth straight month.

Demand for hybrids continued to weaken, with sales of plug-in and extended-range hybrids combined falling 3.6 per cent from July last year as advancements in battery technology and charging infrastructure eased range anxiety about pure EVs.

The trend boosted EV makers such as Leapmotor, Xiaomi, and Xpeng, which reported record sales in July, but weighed on companies like BYD and Li Auto, which relied on hybrids for the bulk of their sales and profits.

BYD saw vehicle sales drop in China for the third consecutive month in July, with a fall of 12 per cent year on year, while its share of China’s new energy vehicle segment shrank to 27.8 per cent from 35.4 per cent a year ago. Its global deliveries, however, edged higher last month, supported by a surge in overseas shipments that accounted for over 20 per cent of total sales.

BYD, China’s biggest rival to Tesla and the leader of the industry’s price-cutting drive, saw production fall in July for the first time in 17 months.

Li Auto, one of the few Chinese EV manufacturers alongside BYD to post a full-year profit, reported a 40 per cent year-on-year sales decline last month. The pioneer in extended-range hybrids recently revamped its pure electric SUV lineup, introducing premium specifications at competitive prices.

The auto industry has been central to a campaign by Beijing against excessive competition in industries wrestling with overcapacity and prolonged price wars.

China will take steps to stabilise growth in the auto and other sectors, an industry ministry official said last month.

Car exports growth accelerated to 25 per cent in July from 23.8 per cent in June, CPCA data showed.

The association earlier upgraded its car sales and exports forecasts for this year, citing better than expected shipments in both domestic and overseas markets. REUTERS