China’s car sales growth decelerated in July, largely due to weakening demand for hybrid vehicles, as government regulators clamp down on a price war that has strained the automotive industry.
Sales in July rose 6.9% compared to the same month last year, reaching 1.85 million vehicles, down sharply from an 18.6% increase in June, according to data released by the China Passenger Car Association (CPCA) on Friday, News.Az reports, citing Reuters.
The growth rate for new energy vehicles (NEVs)—which includes pure electric and plug-in hybrids—slowed to 12% in July from 29.7% in June, though NEVs still outsold traditional gasoline cars for the fifth consecutive month.
Sales of plug-in and extended-range hybrids declined 3.6% year-on-year, as improvements in battery technology and charging infrastructure eased consumers’ concerns about the range limitations of fully electric vehicles. This shift benefited EV makers such as Leapmotor, Xiaomi, and Xpeng, which posted record sales last month. However, companies heavily reliant on hybrids like BYD and Li Auto faced declines.
BYD, China’s largest electric vehicle manufacturer and a major competitor to Tesla, saw its vehicle sales in China fall for the third consecutive month, dropping 12% year-on-year in July. Its share of China’s new energy vehicle market fell to 27.8% from 35.4% a year earlier. Despite this, BYD’s global deliveries edged up, supported by growing overseas shipments, which now account for over 20% of its total sales. Production also fell in July for the first time in 17 months.
Li Auto, known for its extended-range hybrid models and one of the few Chinese EV makers to report a full-year profit, experienced a 40% year-on-year sales decline in July. The company recently updated its pure electric SUV lineup with premium models priced competitively.
The slowdown comes as Beijing intensifies efforts to curb excessive competition and price wars across key industries, including automotive, to stabilize market growth. Officials from the Ministry of Industry and Information Technology have pledged measures to support sustainable growth in the auto sector.
Meanwhile, China’s car exports accelerated, growing 25% in July compared to 23.8% in June, reflecting strong overseas demand. The CPCA recently raised its sales and export forecasts for the year, buoyed by better-than-expected domestic and international shipments.
