Lending Association

China’s February auto sales

Thanks to the week-long Lunar New Year break, February car sales in China fell from January and were lower over the year, with sales of conventional and New Energy Vehicles (NEVs) declining.

Despite exports rising for the first two months of the year and sales from a year ago, the increasingly competitive market and the rising prominence of NEVs, including both battery and plug-in hybrids, are impacting major foreign producers.

Reports from Japan indicate that Nissan and Honda are considering production cuts in China of 30% and 20%, respectively. Nissan, in particular, attributed the rise in NEV sales to its looming decision.

Comparisons month-to-month and year-on-year for January and February separately don’t matter due to changes in the timing of the Lunar New Year break. The combined data for production, sales, and exports tell the real story of how the year has started.

The China Association of Auto Manufacturers (CAAM) reported that China’s auto dealers sold 1.58 million vehicles in February, exceeding the month’s vehicle output of 1.51 million units. Both volumes were lower by 35.1% and 37.5% on month, respectively.

Adding January figures, the first two months of 2024 saw total auto sales climb 11.1% year-on-year to 4.03 million units, while output rose 8.1% year-on-year to 3.92 million units.

For passenger vehicles, January-February witnessed sales of 3.45 million units and production of 3.36 million units, with the former up 10.6% year-on-year and the latter up 7.9% year-on-year.

Sales and production of commercial vehicles for the first two months totaled 575,000 units and 560,000 units, respectively, up by 14.1% and 9% compared with the same period in 2023.

Regarding NEVs, February saw sales and output decline by 9.2% and 16% year-on-year, respectively, to 477,000 units and 464,000 units. However, for January and February, sales and output surged by 29.4% and 28.2% from the same period in 2023, reaching 1.21 million units and 1.25 million units. Of these, sales and production of pure electric cars rose by 11.7% and 12.1% year-on-year to 740,000 units and 771,000 units, while plug-in hybrid vehicles saw a remarkable increase of 72.8% and 66.5% year-on-year, reaching 467,000 units and 480,000 units.

NEV sales accounted for 33.5% of total car sales in January-February, compared to 28.3% a year earlier.

China’s car exports surged by 30.5% in January-February to 822,000 units, marking the best start to a year on record and seemingly on track to surpass 5 million units for the second year in a row. This data highlights the Chinese government’s prioritization of the production and export of NEVs (battery and plug-in vehicles) as a significant economic objective.