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Chinese NEV sales rebound despite impending EU tariffs

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2024-06-14

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Ahead of Wednesday's news that the European Commission will impose varying tariff levels on imports of Chinese battery-powered cars, the latest industry figures show a rebound in Chinese sales in May from April’s surprise dip.

The tariffs don’t seem to target the industry generally—just specific companies. BYD, the industry leader, may face a tariff of 17%, while SAIC, the third-largest Chinese car maker, could face an impost of 38%, or perhaps more.

There’s an announcement early next month of actual levels, with a four-month delay to allow for continued negotiations.

The irony is that the upturn in sales was helped by a new replacement/scrappage system that kicked off at the end of April.

Early data showed sales of passenger vehicles in China in May—including sedans, SUVs, and MPVs—totalled 1.71 million units, down 1.9% from a year ago but 11.4% higher than in April.

The driver of the rise from April was a surge in NEV sales (New Energy Vehicles—battery-powered and plug-in hybrids).

The China Passenger Car Association (CPCA) reported that retail sales of passenger NEVs in China in May were 804,000 units, up 38.5% from a year ago and nearly 19% from April.

Retail sales of battery electric vehicles (BEVs) in China totalled 495,000 units in May, up 27.6% from May 2023 and more than 22% from April.

Retail sales of plug-in hybrid electric vehicles (PHEVs) jumped 61% from May last year to 309,000 units in May, also up 13.7% from April.

The figure is higher than the preliminary figure of 790,000 units released by the CPCA earlier this month, and also higher than the estimate of 770,000 units released at the end of last month.

In April, the weakness in China's auto market continued, with NEV sales falling 5.2% from March to 677,044 units.

Battery electric vehicles (BEVs) accounted for 61.6% of all NEV retail sales in May at 495,000 units, up 27% year-on-year and up 22% from April.

The CPCA figures show China's NEV penetration at the retail level was a record 47% in May, up 14 percentage points from 33% a year earlier and up 3.3 percentage points from 43.7% in April.

Passenger NEVs exported from China were 94,000 units in May, down 4% year-on-year and down 19% from April, nearly 25% of passenger car exports. 78% of those exports were battery-powered vehicles. There was no breakdown by destination.

Tesla sold 72,573 vehicles in May, according to the China Passenger Car Association (CPCA). Of these, 17,358 units were exported, and 55,215 were sold in the domestic market. That was up nearly 30% from April and 75% from May 2023.

Helping boost sales in May was the start of a new round of subsidies covering sales and purchases (and loans), on top of existing government purchase assistance, along with a scrappage and replacement process.

Government subsidies for replacing old cars with new ones introduced at the end of April helped lift sales. Car buyers can now receive subsidies of 7,000 yuan (US$970) for updating their fuel cars or 10,000 yuan for purchasing new energy vehicles (NEVs).

According to the China Passenger Car Association, a total of 8.07 million passenger cars were sold via retail channels in China during the first five months of this year, up nearly 6% from the same period in 2023.

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