China’s passenger vehicle retail sales likely to edge down both YoY, MoM

Shanghai (Gasgoo)- As the trade-in policy gains momentum and luxury brands announce an end to the price war, consumer hesitation in China’s automobile market is beginning to ease. The gradual release of previously suppressed demand, coupled with significant terminal discounts, is expected to lead to a slight seasonal decline in the July auto market. However, year-on-year declines in end-user sales are likely to narrow, indicating a trend of "a slack season not being slack."

Preliminary estimates suggest that China's passenger vehicle (referring to the cars, SUVs, and MPVs locally made on the Chinese Mainland) retail sales will total approximately 1.73 million units in July, a decrease of around 2% both year-on-year and month-on-month, according to the China Passenger Car Association (CPCA). Thanks to the rapid growth of plug-in hybrid electric vehicle (PHEV) sales, China's NEV retail sales are expected to reach 860,000 units in July, roughly on par with June, and representing a penetration rate of up to 49.7%.

According to the CPCA's data, in the first week of July, daily average passenger vehicle (PV) retail sales were 39,200 units, a year-on-year increase of 6.4% and a month-on-month increase of 8.8%. This growth is primarily due to a low base in the same period last year, which was affected by a policy rollback at the end of June. In the second week, daily average PV retail sales were 43,300 units, down 0.6% year-on-year but up 4.3% month-on-month.

After luxury brands announced their exit from the price war in the third week, consumer confidence stabilized, maintaining moderate market heat. However, compared to the high base driven by policies in the same period last year, sales were down 1.3% year-on-year and 14.0% month-on-month. In the fourth to fifth weeks, the market is expected to maintain current heat, with daily average retail sales projected at 79,600 units, down 6.2% year-on-year and 10.9% month-on-month.