The Chinese car industry is still struggling, even though sales of EVs remain solid, and giants like BYD have upgraded their 2024 sales and production estimates.
August marked the second consecutive month of a 5% fall in vehicle sales compared to the same period last year.
Data from the China Association of Automobile Manufacturers (CAA) on Wednesday confirmed an earlier release, showing that car sales in August dropped by 5.0% year-on-year to 2.453 million units.
This was a slightly smaller decline than the 5.2% drop in July, which saw sales fall to 2.49 million units. Both figures were nearly double the 2.7% decrease recorded in June.
The decline occurred despite continued subsidies paid to car buyers as scrappage payments, aimed at encouraging the replacement of older vehicles with new ones, whether electric or internal combustion engine (ICE) vehicles.
While sales of ICE-powered vehicles again fell sharply, sales of new energy vehicles (NEVs), including battery EVs and plug-in hybrids, surged.
In August, NEV sales jumped by 30% to a record 1.1 million units, accounting for 44.8% of total car sales for the month. From January to August, total vehicle sales grew by 3.0% to 18.77 million units, with car production rising by 2.5% year-on-year, reaching 18.67 million units.
The strong performance of NEVs in August, up 11% from July, indicates that consumers are increasingly shifting towards NEVs, particularly plug-in hybrids produced by BYD.
August was the first time NEV sales surpassed one million units in a month, driven largely by the surging demand for plug-in hybrids, especially from industry leader BYD.
The data shows that while plug-in hybrid sales (PHEVs) continued to grow strongly, they did not quite surpass battery EV (BEV) sales.
In August, BEV sales reached 646,000 units, a new year-to-date high, representing an 8.2% increase year-on-year and a 17.2% rise from July.
PHEV sales totalled 453,000 units in August, marking the fourth consecutive month of record highs. This represented an 82% year-on-year increase and a 3.4% rise from July.
BYD continued to dominate NEV sales, with a total of 373,083 units sold in August. Sales of PHEVs outpaced BEVs, with 223,284 units sold (nearly 50% of all PHEVs sold last month) compared to 148,470 BEVs (23% of the total).
BYD’s strong performance in August led the company to raise its sales target for 2024, driven by robust demand for its PHEV models.
BYD has increased its annual sales target to 4 million units, up from its previous estimate of about 3.6 million units.
From January to August, BYD sold 2,328,449 NEVs, representing a 29.9% year-on-year increase. To achieve its 4 million unit target, the company will need to increase monthly sales to around 420,000 units.
Additionally, a brief statement on Tuesday from German luxury giant BMW offered further insight into the weak demand for cars in China.
BMW revealed lower earnings and higher costs due to a recall of 1.5 million vehicles to fix a brake part, a repair that can be done over-the-air (online). The company also cited weak sales in China as a contributing factor to the drop.
BMW reported that demand for vehicles remains muted, as reflected in the weak sales figures for June, July, and August.
“Despite stimulus measures from the government, consumer sentiment remains weak,” BMW explained in the statement, where it also revealed a drop in profit margins of between 30% and 40% due to the recall and the situation in China.