China passenger car sales fall 38% in January

China's passenger car sales fell 38 per cent in January, a 2.4 per cent gain in the previous month, industry data showed on Wednesday, as demand for cars fell after a tax cut on combustion engines and subsidies on electric vehicles expired.

Sales of new energy cars that include pure battery EVs and plug-in hybrids fell 6.3 per cent in January, after a blistering 90 per cent growth in 2022, the China Passenger Car Association CPCA said.

Cui Dongshu, secretary general of the CPCA, said new energy car sales in January didn't meet our expectations, with a rare year-on-year decline in single month sales.

He said that the end of EV subsidies and the Lunar New Year were factors that led to the decline.

The Chinese people celebrated a full week of the Lunar New Year holiday in the month, making it a quieter January compared to the previous years.

China's central government didn't extend a 50 per cent purchase tax cut on combustion engine vehicles after it expired at the end of December, despite signs of easing demand in the world's largest car market.

Automakers including Tesla have to deepen discounts to defend their market shares after ending a decade-long national subsidy for EV purchases.

China's auto market is more dependent on incentives from local governments to encourage purchases.

The cities of Shenyang, Shenyang, and Zhengzhou gave a 10,000-yuan $1,470 rebate on oil cars for those who exchange their cars for electric ones, while the cities of Shenyang, Wuxi, Zhengzhou and Beijing gave coupons for auto consumption.

In January, Tesla sold 66,951 China-made EVs. It was up 18 per cent from December and 10 per cent more than a year ago.

In January, China's battery electric car market share rose to 12.5 per cent from 9 per cent in December, according to a Reuters calculation.

The U.S. company was the second best-selling EV maker in China last month, after BYD Co Ltd shipped 150,164 cars, the CPCA said.

The CPCA data showed that new energy vehicles accounted for a quarter of the total 1.3 million car sales in the month, down from 35 per cent in November 2022.