Despite relaxation of draconian COVID policies, sales of China’s passenger cars last month still dropped for the first time in half a year and will likely remain unchanged in 2023 amid worsened consumer confidence.
Reuters, citing China Passenger Car Association (CPCA), reported on December 8 that the country’s car sales in November plunged by 9.5% year-on-year to 1.67 million units. This indicates the first fall since May.
Data from Statista show that China’s passenger vehicle is the world’s biggest market, accounting for 32.5% of global production. In 2021 alone, the industry is estimated to have manufactured 21.41 million passenger cars, roughly 2.2 times more than Japan at second place.
Cui Dongshu, secretary general of CPCA, said in an online meeting, “The November sales were far worse than previous expectations.”
He added, “The current trend is unprecedented since the financial crisis in 2008.”
The business group projects that Chinese passenger car sales will likely reach 20.6 million units in 2023.
Meanwhile, China Merchants Bank International analysts believe retail passenger vehicle sales in the nation might slide by 6% next year following the expiry of a car purchase subsidy late this month.
The car association suggests that Beijing should prolong the purchase tax cut for small engine vehicles before its expiry until at least June next year.
Authorities in the industry project that there will be a sudden surge in sales this month as consumers don’t want to miss out on the last days of government subsidies and purchase tax cuts.
Despite easing COVID policies, sales outlook remains weak as manufacturers still struggle with elevated inventories of leftover cars.
Therefore, Reuters noted that Shanghai-based Tesla is offering Chinese consumers another price cut of nearly $860 (6,000 yuan) on some models from December 7 to late this year. The EV car giant already offered a 9% discount in October and a roughly $570 (4,000 yuan) insurance subsidy for its Model 3s and Model Ys.
Two sources told the outlet that Tesla intends to reduce the production of its Shanghai-made Model Y by over one-fifth this month compared with November. But the company representative refuted the news.