(Yicai) April 10 -- Car sales jumped 10 percent in China last month from a year earlier after a rough February, thanks to a pickup in consumption following the lunar new year holiday, a national push to encourage vehicle trade-ins, and deepening price competition.

Some 2.2 million passenger cars were sold through wholesale channels in March, up 68 percent on the prior month, according to data released by the China Passenger Car Association yesterday.

About 810,000 new energy vehicles were sold, up 31 percent from a year ago and 81 percent from February, the CPCA’s data also showed. The NEV penetration rate climbed to 37 percent from 31 percent in March 2023.

Following the eight-day Chinese New Year holiday in February, a month in which car sales slumped 21 percent year on year and plunged 46 percent from January, according to earlier CPCA figures, many automakers slashed prices.

The price war in the first quarter dented carmakers’ profits and had a significant impact on the industrial chain, according to CPCA Secretary-General Cui Dongshu. The industry’s profit margin was at a all-time low of 4.3 percent in the first two months of the year, versus the previous 8 percent record set in 2017, Cui said.

BYD's compact crossover sport utility vehicle Song, compact sedan Qin, battery electric city car Seagull, and Tesla's Model Y and Model 3 were among 17 models to sell more than 20,000 units last month, compared with five models in February.

April Expectations

April this year has two more working days than a year earlier, which should lead to more sales, according to the CPCA. Consumption will also be stimulated thanks to recent NEV price cuts, modifications, and upgrades, as well as new vehicle models set to debut at the 18th Beijing International Automotive Exhibition, which opens on April 25.

Sales may also get a boost from a policy change allowing buyers to entirely finance a car purchase with a loan. The authorities said on April 3 that buyers can now borrow 100 percent of the cost of a fossil fuel or new energy vehicle, up from 80 percent and 85 percent previously.

Just as the industry ministry has said, to counter the stiff price war, the sector must rely on high quality technological innovation and economies of scale to bring down costs and achieve balanced growth, Cui pointed out.

With the lessening impact of the Red Sea crisis on global shipping, China's passenger car exports jumped 39 percent to a record 406,000 in March from a year earlier. Those of NEVs surged 71 percent to 120,000.

US, EU Probes

Last month, the US government launched an investigation into Chinese electric cars, with a view to imposing new restrictions, after the European Union opened an anti-subsidy probe into EV imports from China in October.

“The United States and the European Union are suppressing China's electric vehicles, attempting to cut off connections between China's supply chain and the world, which is a severe violation of the fair trade rules and is completely unacceptable,” the CPCA’s Cui said.

“Chinese carmakers have chosen to enter overseas markets, including Southeast Asia, Eastern Europe, North America, and Mexico, regardless of obstructions from the US and the EU and greater costs and pressure,” he said. “They'll firmly integrate into the global supply chain. In the long run, the prospects for NEV exports look bright.”

Editor: Martin Kadiev