Despite price cuts offered by Chinese automakers, the suspension of the vehicle trade-in subsidy policy has exerted a more significant impact, resulting in a rare decline in auto sales during the traditional peak season, with retail volumes falling for the second consecutive month.

According to data released by the China Passenger Car Association (CPCA) on Monday, December 8, China's nationwide retail sales of passenger vehicles stood at 2.225 million units in November, a year-on-year decrease of 8.1%. Sales of fuel-powered vehicles dropped 22% year on year, while those of new energy passenger vehicles rose 4.2%.

Compared with a mere 0.5% year-on-year dip in October, the decline in China's passenger vehicle retail sales widened in November.

Cui Dongshu, Secretary-General of the CPCA, commented, "This situation is quite rare. Normally, the auto market should gather steam from October onward each year, but sales performance in November this year is indeed unusual compared with previous years."

Bloomberg analysis pointed out that demand for fuel-powered vehicles has been hit as many regions in China have scaled back or suspended the vehicle trade-in subsidy policy. At one point, this policy provided consumers with subsidies of up to RMB 20,000 (approximately SGD 3,671) to encourage them to scrap old vehicles and purchase new energy-efficient ones.

Data showed that as of October 22, applications for the trade-in subsidy had exceeded 10 million units. However, as subsidies were suspended across most regions, the average daily subsidy volume plummeted to 30,000 units in November. Additionally, the exceptionally high sales base recorded in November last year has also weighed on the overall performance this November.

In the electric vehicle market, more than 10 automakers, including Xiaomi, pledged to offer purchase tax subsidies of up to RMB 15,000 to consumers who placed orders before the end of November. While this has boosted sales to a certain extent, with government support gradually tapering off and affecting demand, market focus is shifting to how automakers can sustain their sales momentum into the new year.

The CPCA noted that to offset the increased vehicle purchase costs for consumers caused by extended delivery cycles, automakers have rolled out purchase tax subsidy schemes. "Such relief measures are only temporary at the end of this year and are not sustainable in the long run."

Despite price cuts offered by Chinese automakers, the suspension of the vehicle trade-in subsidy policy has exerted a more significant impact, resulting in a rare decline in auto sales during the traditional peak season, with retail volumes falling for the second consecutive month.

According to data released by the China Passenger Car Association (CPCA) on Monday, December 8, China's nationwide retail sales of passenger vehicles stood at 2.225 million units in November, a year-on-year decrease of 8.1%. Sales of fuel-powered vehicles dropped 22% year on year, while those of new energy passenger vehicles rose 4.2%.

Compared with a mere 0.5% year-on-year dip in October, the decline in China's passenger vehicle retail sales widened in November.

Cui Dongshu, Secretary-General of the CPCA, commented, "This situation is quite rare. Normally, the auto market should gather steam from October onward each year, but sales performance in November this year is indeed unusual compared with previous years."

Bloomberg analysis pointed out that demand for fuel-powered vehicles has been hit as many regions in China have scaled back or suspended the vehicle trade-in subsidy policy. At one point, this policy provided consumers with subsidies of up to RMB 20,000 (approximately SGD 3,671) to encourage them to scrap old vehicles and purchase new energy-efficient ones.

Data showed that as of October 22, applications for the trade-in subsidy had exceeded 10 million units. However, as subsidies were suspended across most regions, the average daily subsidy volume plummeted to 30,000 units in November. Additionally, the exceptionally high sales base recorded in November last year has also weighed on the overall performance this November.

In the electric vehicle market, more than 10 automakers, including Xiaomi, pledged to offer purchase tax subsidies of up to RMB 15,000 to consumers who placed orders before the end of November. While this has boosted sales to a certain extent, with government support gradually tapering off and affecting demand, market focus is shifting to how automakers can sustain their sales momentum into the new year.

The CPCA noted that to offset the increased vehicle purchase costs for consumers caused by extended delivery cycles, automakers have rolled out purchase tax subsidy schemes. "Such relief measures are only temporary at the end of this year and are not sustainable in the long run."