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- October 13, 202619°
- BIST10012,151-0.94%
- USD49.220.00%
- EUR55.21+0.28%
- GOLD4,194.50-0.52%
- INTEREST37.00%-1.00
- BITCOIN82,961-0.85%
- October 13, 202619°
Contraction in China's Auto Market Continues in May
Car sales in China fell by 22.3% year-on-year in May to 1.53 million units. While electric and plug-in hybrid vehicle sales also declined, exports remained strong.
The contraction in China's auto market persisted in May. According to data from the China Passenger Car Association, the country's vehicle volume decreased by 22.3% compared to the same period last year, falling to 1.53 million units.
This marks the eighth consecutive month of decline for the Chinese automotive sector. The total market volume for the first five months of the year also dropped by 19.7%, reaching 7.18 million vehicles.
Loss of momentum in electric vehicles
Electric and plug-in hybrid vehicles accounted for 62.2% of the total car market. However, deliveries in this segment fell by 7.5% year-on-year in May, marking the fifth consecutive month of decline.
Analysts point to weakening consumer confidence and reduced government incentives as factors suppressing domestic demand. The Chinese government aims for economic growth between 4.5% and 5% by the end of the year.
Domestic and foreign manufacturers seek new strategies
Eugene Hsiao, head of China equity strategy at Macquarie Capital, noted that vehicle ownership rates have already reached quite high levels for an emerging market. He assessed that the market, with an annual retail volume of 23 to 25 million transactions, has entered a maturation phase.
Experts expect the Chinese retail auto market to grow only in single digits over the next five to ten years. With the rise in electric vehicle usage, leading manufacturers are predicted to outperform the sector average.
Some foreign manufacturers, including Volkswagen, are developing local electric models to revitalize their operations in China. Companies are seeking ways to regain strength in an increasingly competitive market.
Exports partially offset domestic weakness
NIO CEO William Li highlighted the domestic market slowdown, stating that the local automotive industry has left its golden era behind. While NIO continues to focus on the domestic market, many competitors in the sector are shifting growth strategies toward overseas markets.
In May, overall overseas shipment volume rose by 74.7% year-on-year. Cross-border operations in the electric and plug-in hybrid vehicle segment increased by 112.6% during the same period, partially compensating for weak domestic sales.
This situation indicates ongoing pressure on domestic demand in China's automotive sector, while export channels are becoming an increasingly vital support line for companies.
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