(Yicai) Dec. 9 -- China’s auto sales fell for the second month in a row in November, with the slump worsening from the prior month, as localities scaled back or froze trade-in incentives for gasoline cars while vehicle exports hit a record high.

Retail sales of passenger vehicles dropped 8.1 percent to 2.23 million units last month from a year earlier, compared with a 0.8 percent decline the month before, according to data released yesterday by the China Passenger Car Association. On a monthly basis, sales fell 1.1 percent.

November’s pullback was long anticipated, and was mainly due to a 22 percent plunge in sales of internal combustion engine cars, said Cui Dongshu, the CPCA’s secretary-general.

Buyers stood on the sidelines after local governments narrowed the scope of trade-in incentives, trimmed payouts, and halted subsidies outright, Cui said, adding that local officials are trying to smooth this year’s growth trajectory and avoid an overly sharp run-up in sales.

Trade-in applications reached 11.2 million in the first 11 months of the year. But with widespread subsidy changes, average daily applications tumbled to 30,000 in November.

Car sales were extremely high in November last year as the subsidy programs got underway, so last month’s decline represents a correction, with sales still up 5 percent compared with November 2022.

BYD was the best-selling carmaker last month at 307,000, followed by Geely Automobile with 268,000. FAW-Volkswagen, Chery Automobile, and Changan Automobile ranked third to fifth.

Despite the overall sales decline, new energy vehicle sales continued to grow in November, up 4.2 percent to 1.32 million from a year earlier. The NEV adoption rate reached 59.2 percent.

Vehicle production and exports remained strong, setting new records. Some 3.11 million were manufactured in November, up 3 percent from the same period last year and 5.3 percent on the previous month. Exports surged 52 percent and 9.1 percent, respectively, to 601,000.

In the first 11 months, retail car sales rose 6.1 percent to 21.48 million from a year ago, in line with the forecast for a "slow start, strong middle, and flat end." NEV sales soared 20 percent to 11.47 million, with the adoption rate climbing to 59.3 percent from 52.9 percent.

The CPCA has cut its forecast for full-year domestic retail growth to around 5 percent, but raised its export growth prediction to more than 20 percent, Cui said.

"There's no need to push too hard in the fourth quarter, as this will allow consumers to make purchases in a stable environment and achieve relatively good growth at the beginning of next year," he explained.

2026 will be full of challenges. The NEV purchase tax exemption will be halved to 5 percent from 10 percent, removing support worth more than CNY100 billion (USD14.1 billion).

Cui said the focus will now shift to first-time buyers from owners trading in vehicles. "Half of Chinese households still don't own a car, so stimulating first-time purchases is more urgent," he noted. “We hope the cut in vehicle purchase tax will benefit first-time buyers and those of small electric vehicles.”

Editor: Futura Costaglione