China's car sales growth slows in July, with weaker hybrid demand
Sales rose 6.9% from July 2024 to 1.85 million cars, down from an 18.6% year-on-year increase in June, data from the China Passenger Car Association showed on Friday.
Sales growth of new energy vehicles, including pure electrics and plug-in hybrids, slowed to 12% from 29.7% in June, but still outsold gasoline cars for the fifth straight month.
Demand for hybrids continued to weaken, with sales of plug-in and extended-range hybrids combined falling 3.6% from July last year as advancements in battery technology and charging infrastructure eased range anxiety about pure EVs.
The trend boosted EV makers such as Leapmotor (9863.HK), opens new tab, Xiaomi (1810.HK), opens new tab, and Xpeng (9868.HK), opens new tab, which reported record sales in July, but weighed on companies like BYD (002594.SZ), opens new tab and Li Auto (2015.HK), opens new tab, which relied on hybrids for the bulk of their sales and profits.
BYD saw vehicle sales drop in China for the third consecutive month in July, with a fall of 12% year-on-year, while its share of China's new energy vehicle segment shrank to 27.8% from 35.4% a year ago. Its global deliveries, however, edged higher last month, supported by a surge in overseas shipments that accounted for over 20% of total sales.
BYD, China's biggest rival to Tesla (TSLA.O), opens new tab and the leader of the industry's price-cutting drive, saw production fall in July for the first time in 17 months.
Li Auto, one of the few Chinese EV manufacturers alongside BYD to post a full-year profit, reported a 40% year-on-year sales decline last month. The pioneer in extended-range hybrids recently revamped its pure electric SUV lineup, introducing premium specifications at competitive prices.
The auto industry has been central to a campaign by Beijing against excessive competition in industries wrestling with overcapacity and prolonged price wars.
China will take steps to stabilise growth in the auto and other sectors, an industry ministry official said last month.
Car exports growth accelerated to 25% in July from 23.8% in June, CPCA data showed.
The association earlier upgraded its car sales and exports forecasts for this year, citing better than expected shipments in both domestic and overseas markets.
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