China Passenger Vehicle Retail Sales Expected to Surge 70.2% in January

BEIJING, January 18 (TMTPost)-- China’s auto market is expected to have a good start of the year 2024.

Credit：Visual China

The retail sales of passenger vehicles will surge 70.2% year-over-year (YoY) to around 2.2 million units in January due to the base effect, according to preliminary estimates of the China Passenger Car Association (CPCA) released on Thursday. The sales plunged 37.9% YoY to 1.293 million cars a year earlier, when China embraced a January with working days less than usual as the Chinese New Year started on 22th that month. Despite robust YoY growth, retail sales of passenger cars dropped 6.5% from the December, and that of the new energy vehicles (NEV), including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), are estimated to be about 800,000 units, representing a 15.3% month-over-month (MoM) decrease.

The penetration rate of NEVs in January will declined to 36.4%, down 3.7 points from the previous month, CPCA said, adding that was roughly in line with the normal seasonal performance. For December, 2023, retail sales of passenger cars rose 8.5% YoY to 2.353 million units, a little bit stronger than the previous forecast, and that of NEVs grew 47.3% YoY to 946,000 vehicles, with a penetration rate of 40.1%, data from CPCA showed.

According to CPCA’s survey, the average discount in the overall passenger vehicle market stood at approximately 20.4% in the beginning of January. While some of manufacturers slightly pulled back their promotional offers in the end of December, some of other peers have stepped up launching a new wave of promotions prior to this year’s Chinese New Year in February. Therefore, the promotions in the whole market still have no signs of withdrawal. As of the mid-January, most of automakers maintained their promotional policies initiated late 2023, and the intensified promotions continued to stimulate consumers’ purchase appetite, which is helpful for unlocking vehicle demand ahead of the traditional Lunar Year holiday in China, CPCA noted. In additional, the holiday in February enables January to become a month that has 22 working days in total, which is positive for vehicle delivery. Generally speaking, CPCA believes the auto market this month is facing tailwinds to get off to a good start for 2024.

CPCA’s estimates came days after Tesla launched a new round of price war in China, cutting prices even on its recently updated version of Model 3 sedan. The U.S. EV giant lowered prices on all the variants of new model 3 and two versions of Model Y on December 12. The Model 3 Rear-Wheel Drive (RWD) now costs RMB245,900 (US$34,620), representing a reduction of RMB15,000, or around 6%. Price of the Model 3 Dual Motor All-Wheel Drive version (AWD) dropped RMB11,500 to RMB285,900. Model Y RWD version was cut by RMB7,500 to RMB258,900, and the long range version was reduced by RMB6,500 to RMB299,000. In the meantime, Tesla China discontinued the insurance subsidy it offered for Model 3 and no longer offered the auto loan with the low rate of 1.99%.

The adjustment is Tesla’s first direct price cut for newly launched Model 3. it unveiled the popular model in last September. That is the first major upgrade since the midsize electric vehicle (EV) was first revealed in 2016, and is also Tesla’s first change to its mass-market car line-up since it rolled out Model Y, another best-seller, in 2020. The most unexpected of launch is that Tesla raised the starting price for the entry offering. The RWD version was priced at RMB259,900, 12% higher than price of the older version, while the AWD version now costs RMB395,900, RMB36,000, or 10.8% cheaper than the older. The new Model 3 was just available in its largest market, the United States, earlier this week. The new Model 3 costs the same as the old one in North America. The Model 3 RWD costs US$38,990 and AWD remains priced at US$45,990.