China's January Passenger Car Sales Drop 45% Year-on-Year to 980,000 Units

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] China's passenger car sales have plummeted due to the suspension of subsidy payments.

On the 2nd, Chinese economic media Caixin cited statistics from the National Passenger Car Market Information Association, reporting that from the 1st to the 27th of last month, nationwide retail sales of passenger cars reached 985,000 units, a 45% decrease compared to the previous year. Compared to the previous month, it decreased by 43%. Wholesale sales volume was 891,000 units, a 50% plunge from last year.

[Image source=Reuters Yonhap News]

During the same period, retail sales of new energy vehicles were 304,000 units, down 1% year-on-year and 43% month-on-month. Wholesale sales also dropped sharply to 299,000 units, a 50% decrease respectively.

By company, BYD delivered 151,341 units in January, and Li Auto sold 15,141 units, ranking first in the industry. In addition, Nio sold 8,506 units, Xiangfeng Motors 5,218 units, and Leapmotor 1,139 units. In the case of Leapmotor, sales volume decreased by more than 80% compared to the previous month.

Jiang Yongwei, vice chairman of the China Electric Vehicle Association, explained that the sluggish car sales were due to the termination of subsidies for new energy vehicles last year. Caixin diagnosed, "The automobile market is facing challenges," adding, "Since the withdrawal of subsidies, the previous growth trend in vehicle sales has begun to slow down." Furthermore, it expressed concern that "while prices of some new energy vehicle models rose earlier this year, leading companies such as Tesla have lowered their prices."

An official familiar with new energy vehicle policies told Caixin that relevant departments are reviewing whether to introduce automobile consumption incentive policies, and that demand activation policies may be discussed as January sales figures come out. However, the official explained, "Policies are a double-edged sword," adding, "If policies are withdrawn, the market will immediately contract, so it is not a fundamental solution."