China’s locally-made passenger vehicle retail sales likely to drop 4.8% YoY in July 2023: CPCA

Shanghai (Gasgoo)- China's domestic passenger vehicle ("PV") retail sales are anticipated to reach 1.73 million units in July 2023, which should decline 8.6% from the previous month, and also fell 4.8% from the previous year mainly due to the higher base resulting from the purchase tax incentives for year-ago period, according to the China Passenger Car Association ("CPCA").

Of the PVs retailed in China in July, around 620,000 units were expected to be new energy vehicles (NEVs, referring to battery electric vehicles and plug-in hybrid electric vehicles), representing a 6.8% growth month-on-month, but a 27.5% jump year-on-year.

The major manufacturers' average daily retail sales during the first week of July stood at 30,800 units, down 2% compared to early June, and in the second week, the volume was 50,600 units, marking a 5% decline compared to the second week of June. According to the CPCA, the third week of July is expected to have an average daily retail volume of about 58,200 units, reflecting a 17% decrease from the third week of June due to promotional activities in mid-June boosting the sales base. In the fourth week, the market's performance is anticipated to follow the usual seasonal pattern, with an expected average daily retail volume of 63,700 units, down 19% compared to the fourth week of June.

For the first half of the year, the total retail sales of consumer goods in China grew by 8.2% year-on-year, 2.4 percentage points higher than that of the first quarter. The automobile segment saw a year-on-year growth of 6.8%. However, overall consumer confidence has not significantly improved, particularly regarding large consumer goods purchases, which still require further stimulation. The macro-economic climate is expected to stabilize and recover in the third quarter, though not at the expected pace, as consumer income growth remains insufficient, and expenditure willingness still needs improvement.

The association added the market's remarkable performance in June was largely driven by short-term policy incentives and promotional factors, making it difficult for the market momentum to sustain. In the second half of the year, the expectation is for more stable support for the automotive market through regional policies, which may not bring about a significantly stronger-than-expected stimulus.

In the second half of the year, the new energy market is expected to witness a substantial influx of competitive new products, potentially driving an increase in China’s overall auto sales.