China witnessed a 25.5% surge in passenger vehicle sales this November compared to last year, marking a faster pace of growth than the previous month and continuing an upward trend for the fourth consecutive month.
Industry data released on Friday by the China Passenger Car Association (CPCA) revealed that car sales reached 2.1 million units last month, showcasing an acceleration from the 9.9% increase observed in October. This surge in sales was propelled by intensified price competition among automakers striving to achieve their sales targets.
November witnessed a remarkable 39.8% increase in the sales of new energy vehicles, including electric vehicles and plug-in hybrids, compared to the previous year. New energy vehicles constituted 40% of total car sales in the month, a significant uptick attributed to escalated promotions and discounts.
New tax breaks for new energy vehicle purchases have been introduced, extending until 2027. However, these incentives come with caps on tax exemptions that will start in 2024. This adjustment is anticipated to increase the expenses associated with higher-priced models, hopefully acting as a catalyst for strong year-end sales.
BYD set another sales record in November, although with marginal gains compared to October. Additionally, EV upstarts including Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV) NYSE: XPEV) and Leapmotor also achieved record deliveries in November Aito, an EV brand backed by Huawei, experienced rapid growth by delivering over 10,000 units of its revamped M7 cars for the second consecutive month in November.
However, despite these successes, the secretary general of the association, Cui Dongshu, highlighted the immense pressure faced by dealers in China. They are struggling to meet year-end operational and sales targets, which has had a negative impacted their earnings.
Tesla (NASDAQ:TSLA), which kicked off a price war in China at the start of the year, has reversed course with five upward price adjustments since late October.
CMB International noted that Tesla is expected to prioritize the margins of its Shanghai factory more in 2024.
According to the association's data, the U.S. EV maker's exports of China-made EVs declined by 61.1% in November, totaling 16,928 units, while China's overall passenger vehicle exports saw a slight 3% decrease from October to November.