BEIJING/SHANGHAI (Reuters): China’s passenger vehicle sales returned to growth in August from a year earlier, as further price cuts and new tax breaks for electric vehicles and other green cars boosted consumer sentiment, despite the struggling broader economy.
Buoyed by hefty discounts, Tesla’s share of China’s electric vehicle (EV) market almost doubled in August from July.
Car sales jumped 2.2% in August on a yearly basis to 1.94 million units, data from the China Passenger Car Association (CPCA) showed on Friday, the first monthly gain since May.
Sales rose 8.5% from July. For the first eight months, sales were up 1.8% at 13.38 million units.
As price cuts become entrenched in the world’s largest auto market, Chinese automakers are stepping up efforts to expand into overseas markets while competition intensifies on their home turf.
Warren Buffett-backed Chinese EV giant BYD on Monday launched its Seal electric sedan for Europe at the IAA Mobility motor show in Munich.
Smaller domestic rival Xpeng also used the Munich show to reveal plans for expansion into more European markets next year.
China’s passenger car exports surged 31% in August on-year following a 63% jump in July.
Meanwhile, new energy vehicles (NEVs), a key pillar of the auto market and one of the main targets of policy measures to revive purchases of big-ticket items, maintained solid growth.
Sales of NEVs, including pure battery EVs and plug-in hybrids, were up 34.5% in August, accounting for 36.9% of total car sales. Sales rose 11.8% in August versus July.
A price war initiated by Tesla at the start of the year is continuing in the domestic market, with the US EV maker announcing additional cuts after slashing prices twice last month.
However, Tesla’s long-awaited, restyled Model 3 was introduced with a starting price 12% higher than the previous, base rear-wheel drive model.
Deliveries of its China-made Model Y hit 65,316 last month, topping CPCA passenger vehicle model rankings in sales terms.
Tesla sold 64,694 cars in China in August, taking its share of China’s EV market to 13.2%, nearly double the previous month’s 7.5%, according to a Reuters calculation based on CPCA data.