(Yicai Global) Feb. 3 -- Auto sales fell in China last month because of the Chinese New Year holiday and after purchase subsidies on new energy vehicles ended last year.

Some 985,000 passenger cars were sold in China from Jan. 1 to 27, down 45 percent from a year earlier and 42 percent from December, according to a report published by the China Passenger Car Association on Feb. 1. NEV sales stood at 304,000, down 1 percent from a year ago and 43 percent on the previous month, it added.

A number of NEV makers have also released their January sales figures. BYD sold 151,341, down 36 percent from last month. Li Auto sold 15,141, ranking first among China’s NEV startups, despite a 28 percent drop.

The CPCA said that NEV sales growth has bottlenecked due to the expiration of the subsidy policy at the end of 2022. The fact there have been price cuts by leading makers such as Tesla is also prompting consumers to hold onto their money for now.

But China's electric vehicle sector still has strong policy support and electricity prices are relatively low, so the buying environment for EVs is still much better than for fuel cars, which helps explain their much higher than expected penetration rate of 30 percent, the CPCA said.

This sudden boom in NEV sales has, to an extent, upset the smooth development of the passenger car market, so government policy should gradually return to more balanced treatment of fuel cars and NEVs, it said.

Editor: Tom Litting