Gasgoo Munich- Following the mid-year sales surge in June, China's auto market is set to slip back into its traditional seasonal lull in July, according to the latest forecast from the China Passenger Car Association (CPCA). Retail sales of passenger vehicles are projected to reach roughly 1.52 million units — a 16.8% drop from a year ago and a 5.1% decline from June. New-energy vehicles (NEVs) are expected to buck the trend slightly, with retail sales forecast at 980,000 units. That would push the market penetration rate to 64.5%, marking a fresh historical high.
Image Source: CPCA
The CPCA also reviewed June's performance. Data shows passenger vehicle retail sales hit 1.602 million units. While that represents a 23.2% plunge year-on-year, it marks a 6.1% increase from May, reflecting a rebound driven by the end-of-quarter push. NEVs proved resilient, with retail sales reaching 1.007 million units and a penetration rate of 62.9%. For the first half of the year, cumulative passenger retail sales totaled 8.701 million — a 20.2% annual decline — suggesting the market is stabilizing after falling from its peak. NEVs accounted for 4.704 million of that total, securing a 54.1% share and cementing their dominance. In contrast, internal combustion engine vehicles saw sales slide 26.4% to 3.996 million units, with their market share accelerating its decline.
Analysts attribute July's downturn to several factors: demand was largely pulled forward by the June surge, while extreme heat and heavy rainfall across multiple regions have dampened showroom traffic. Adding to the pressure is weakening consumer sentiment. Although government trade-in subsidies and new model launches provide a floor for the market, the overall trend points to a seasonal pullback.
Weekly data indicates daily retail volumes have remained sluggish throughout July, putting the full month on track for a 16.8% annual decline. Notably, NEVs are demonstrating greater resilience than traditional fuel vehicles, thanks to rapid product iteration and competitive pricing. Their year-on-year and month-on-month drops are both smaller than those of ICE cars, making them a critical counterweight to the broader market's downward pressure.
