What to Know About cPCA forecasts China’s July NEV retail to dip slightly to about 980,000 amid seasonal slowdown
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- NEV retail penetration is expected to reach about 64.5% in July, rising further from June.
- Overall passenger vehicle retail sales are forecast at 1.52 million, down 16.8% year-on-year.
The China Passenger Car Association (CPCA) expects retail sales of new energy vehicles (NEVs) in China to continue declining in July as the market enters its traditional slow season.
Retail sales of passenger NEVs are expected to be about 980,000 units in July, edging down from June, while their market penetration rate is set to rise further, the CPCA said in a report on Thursday.
Overall passenger vehicle retail sales are forecast at about 1.52 million units, down 5.1% from June and 16.8% from a year earlier, according to the report.
That would lift NEVs' share of the overall market to a record high of about 64.5%, up from 62.9% in June.
July is traditionally a slow season for China's auto market, and the effects of automakers pulling forward demand in June to meet first-half sales targets are becoming apparent, the CPCA said. The market is returning to being driven by underlying demand.
High temperatures, heavy rain and flooding in several regions weighed on showroom traffic and vehicle deliveries, while consumers remained reluctant to make purchases. Still, trade-in subsidies and rising deliveries of newly launched models provided a floor for the market.
The CPCA's latest survey showed that leading automakers, which account for about 70% of total market sales, slightly lowered their July retail targets from June as companies entered their summer slowdown.
On a weekly basis, the market saw a seasonal pullback in the first week of July, with average daily retail sales of 34,000 units. Sales edged up to 39,000 units a day in the second week despite disruptions from extreme weather in some regions.
High temperatures curbed travel and vehicle-buying demand in the third week, when average daily retail sales reached 47,000 units, slightly weaker than typical seasonal patterns.
The CPCA expects the market to remain at a low level in the fourth and fifth weeks, with sales continuing to decline by about 17% year-on-year.
The temporary recovery in June was driven not by a substantive improvement in consumer demand, but by promotions linked to first-half sales assessments and a concentration of new model deliveries, the CPCA said.
China's total retail sales of consumer goods rose 1.3% year-on-year in the first half, while automobile-related retail sales fell 12.6%, remaining a drag on big-ticket consumption, according to the National Bureau of Statistics. Consumers largely remained on the sidelines in anticipation of better deals.
By powertrain, NEVs showed greater resilience than internal-combustion-engine vehicles, supported by rapid product upgrades and stronger value for money. Their year-on-year and month-on-month declines were both smaller, helping offset the contraction in the conventional vehicle market.
China's passenger vehicle retail sales totaled 1.602 million units in June, down 23.2% year-on-year but up 6.1% from May. NEV retail sales came in at 1.007 million units, down 9.4% year-on-year and up 6.0% month-on-month, marking the first time this year that monthly sales returned above 1 million units.
Retail sales of internal-combustion-engine vehicles plunged 38.9% year-on-year to 591,000 units in June. High fuel prices are accelerating a structural reshaping of the auto market, the CPCA said.
China's passenger-vehicle retail sales totaled 8.701 million units in the first half, down 20.2% year-on-year, as the market sought a bottom after retreating from elevated levels. NEV retail sales reached 4.704 million units, down 14.0%, with a penetration rate of 54.1%.
