Industry data revealed a significant downturn in China’s new energy vehicle (NEV) sales, dropping by 38.8% compared to the previous month. This decline, the first of its kind since August 2023, comes as demand waned in the world’s largest auto market, despite efforts led by Tesla to stimulate sales through renewed discounting.
According to the China Association of Automobile Manufacturers (CAAM), total vehicle sales, including exports, reached 2.44 million units in January. While this figure marks a notable 47.9% increase from the previous year, it also signifies a substantial 22.7% decline from December.
The data also highlighted that NEV sales, constituting 29.9% of total sales, experienced robust growth of 78.8% year-on-year in January.
CAAM’s data, which tracks automakers’ sales to dealers and encompasses commercial vehicles like trucks, unless specified, provides a comprehensive overview of the automotive market.
Last January, passenger vehicle sales in China witnessed a sharp decline of 37.9% year-on-year and a 40.4% month-on-month slump, according to the China Passenger Car Association (CPCA). These were the poorest January performances since the 2000s, attributed to the cessation of subsidies and tax cuts. Additionally, shortened business days due to the Chinese New Year falling in January last year further impacted sales.
The lackluster start to 2024 for China’s auto market underscores subdued consumer demand in the world’s second-largest economy amid a prolonged housing downturn and market volatility.
In response to dwindling demand and escalating competition, Tesla initiated price reductions on some Model 3 and Y cars in China in January. Moreover, the company offered cash discounts for some Model Ys starting from February 1st, reversing five consecutive price hikes since late October.
According to Reuters calculations, Tesla lowered the starting prices of the basic versions of Model 3 and Y by 6% and 3%, respectively, in January, contrasting with November when prices were raised.