Serious traffic jams occurred on the roads in Chaoyang District, Beijing, with many vehicles.
Southwest Photography | Digital Vision | Getty Images
Passenger car sales in China rose 4.3% year-on-year in September, ending five months of decline, driven by government subsidies to encourage trade-ins as part of a wider stimulus package.
All the gains came from electric cars, whose buyers and manufacturers have benefited from a doubling of subsidies for consumers since July, while sales of gasoline cars have continued to shrink in China, a market once dominated by foreign brands.
In September, sales in the world’s largest auto market reached 2.13 million vehicles, up from 2.04 million vehicles in the same period last year. Data from the China Passenger Car Association (CPCA) showed that sales in the first nine months increased by 1.9% compared with 2023 levels.
Sales of electric vehicles and plug-in hybrid vehicles increased by 50.9%, accounting for 52.8% of overall sales. This is the third consecutive month that sales of electric vehicles, including plug-ins, have surpassed those of gasoline-engine vehicles in China.
Sales of gasoline vehicles exceeded 1 million units in September, an increase of more than 100,000 units from August. But this is still far from the sales of more than 1.29 million vehicles in China last September.
Sales of electric vehicles and plug-in hybrid vehicles, which Chinese industry organizations classify as “new energy vehicles,” hit 1.12 million units in September, and 7.13 million units in the first nine months.
Global electric vehicle sales have slowed this year as automakers outside China scale back production.
However, sales in China have increased due to increased subsidies for consumers to trade in old cars for electric and more fuel-efficient vehicles – a program similar to the United States’ “trade-in” stimulus program in 2009.
Tesla sold more than 72,000 vehicles in China, a 66% increase from last year and its best month this year. The U.S.-based company exported 16,121 Chinese-made vehicles in September, down from more than 23,000 the previous month.
Tesla, which relies on China for about a third of its sales, has also increased its own incentives, including zero-interest financing.
Chinese electric car makers BYD and Xpeng Motors had their best-ever months in September.
China’s top-selling new energy vehicle manufacturers in the first eight months were BYD, Geely and Tesla.
Subsidies start to be implemented
The Chinese government announced in July that it would provide subsidies of more than $2,800 when consumers scrap their old cars and replace them with electric ones, double the amount launched in April. Subsidies for more fuel-efficient gasoline-powered vehicles are just over $2,100.
As of the end of September, 1.1 million consumers had registered for subsidies.
Cui Dongshu, secretary-general of the Passenger Transport Association, said on Saturday that he expected local government trade-in subsidies to perform strongly in the fourth quarter.
But car sales data released on Saturday by another industry association, the China Association of Automobile Manufacturers (CAAM), was less optimistic.
Data from the China Association of Automobile Manufacturers showed that China’s auto sales fell by 1.7% last month, which includes commercial vehicles such as trucks and passenger cars.
Data from the China Association of Automobile Manufacturers showed commercial vehicle wholesale volume, including exports, fell 23.5% from a 12.2% decline in August.
Finance Minister Lan Fuan said on Saturday that the government would “significantly increase” debt issuance to boost the world’s second-largest economy and strive to bring faltering economic growth back to the target of around 5%. China’s central bank announced interest rate cuts and liquidity injections in its biggest easing since the COVID-19 pandemic.
One open question is whether China will adopt more stimulus measures to support the purchase of electric vehicles, which industry officials have identified as a priority.
According to Reuters, the Ministry of Finance plans to issue 1 trillion yuan ($140 billion) of special sovereign debt, with part of the proceeds going to increase subsidies for consumer goods trade-in programs and business equipment upgrades.
Although Chinese automakers face political headwinds in major overseas markets, auto exports grew 22% in September, with sales in the first nine months reaching 3.55 million vehicles.
Last year, China surpassed Japan to become the world’s largest automobile exporter. U.S. officials and others argue that China produces more cars than it sells domestically, which, combined with past subsidies, gives Chinese electric vehicle makers an unfair advantage.
After last week’s vote, the European Union will continue to impose tariffs of up to 45% on electric vehicles made in China, a move that was opposed by Germany. China has said it hopes to avoid tariffs by negotiating a minimum sales price for electric vehicles in Europe.
The United States and Canada each impose 100% tariffs on Chinese-made electric vehicles, effectively excluding them from those markets.
