China’s car exports reached a record high in April, with a 38% year-on-year increase to 417,000 units. This surge in exports came as domestic sales experienced a 5.8% decline compared to the previous year. The decline in domestic sales can be attributed to intensifying price competition and consumer cautiousness amid a shaky economic recovery.
The ongoing anti-subsidy investigation by the EU into Chinese automakers has disrupted and put pressure on vehicle exports to the bloc. However, China has been actively exploring other markets such as South America, Australia, and ASEAN countries for export opportunities. According to Cui Dongshu, the secretary general of the China Passenger Car Association, local automakers will have to choose between expanding overseas or risking being left behind by the intensifying competition in the domestic market.
In terms of passenger vehicle sales, the world’s biggest auto market experienced a 5.8% decline in April compared to the previous year, with sales totaling 1.55 million units. This also represents a 9.6% decrease from March. While car sales had seen a 5.7% growth in March compared to the previous year and a significant 53% increase month-on-month, the market slowdown in April was worse than expected.
Cui explains that some automakers continued to produce vehicles despite the sluggish market, resulting in rising inventories at dealerships. This highlights the challenges faced by automakers in balancing production levels with market demand.
Despite the overall decline in car sales, new energy vehicle (NEV) sales reached a record high. NEVs accounted for 43.5% of total car sales in April, surpassing the milestone of over half in the first half of the month. China has set a target of 45% NEV sales by 2027.
However, within the NEV category, sales of electric vehicles (EVs) still lag behind those of plug-in hybrids (PHEVs). In April, EV sales increased to 12.1% from 10.5% in March, while PHEV sales jumped 64.2% compared to a 75.4% increase in March. This indicates that EV sales have contracted by 6.3% since March, while PHEV sales have dropped by 4.7%.
The success of domestic giant BYD can be attributed to the PHEV segment, which accounted for 57% of the company’s car sales in April. Additionally, China’s share of the global PHEV market has risen to nearly 70% in the first quarter, according to data from the China Passenger Car Association. On the other hand, Japanese automakers, who have been pioneering hybrid technologies, only captured 1.9% of the global PHEV market in the same period.
Despite a protracted price war involving over 40 brands, electric vehicle sales remain mediocre in China. This indicates a slowing demand despite efforts to attract consumers through subsidies and no down payment options. China has announced subsidies of up to 10,000 yuan ($1,380) for auto trade-ins, and automakers like Tesla and BYD have started offering best-selling models with no down payments.
Overall, while car exports from China have surged to a record high in April, domestic sales experienced a decline due to price competition and consumer cautiousness. The ongoing anti-subsidy investigation by the EU has also impacted vehicle exports to the bloc. However, China is actively exploring other markets for export opportunities. Within the domestic market, there is a growing emphasis on new energy vehicles, with NEVs accounting for a significant portion of total car sales. However, EV sales still lag behind PHEV sales. The success in the PHEV segment has benefited domestic automakers like BYD, while Japanese automakers have struggled to capture a significant share of the global market. Despite efforts to stimulate demand through subsidies and no down payment options, overall electric vehicle sales in China remain lackluster.
