China's car sales extend slide as shift accelerates to overseas markets
For the first seven months of the year as a whole, domestic passenger vehicle sales declined 20.5%
China's car sales continued a downward trend in July, marking the 10th consecutive month of decline as automakers intensified their push into overseas markets to counteract fierce competition within the world's largest auto market. The decline in domestic sales, which dropped 21.1% year-over-year to 1.47 million vehicles, was less severe than initially anticipated, according to the China Passenger Car Association (CPCA).
However, export sales surged 88.2% to 923,000 vehicles. CPCA secretary-general Cui Dongshu cited high fuel prices and subdued demand for entry-level sedans as factors contributing to the weaker domestic market. Export growth, particularly in electric vehicles and plug-in hybrids, outpaced domestic sales, which declined by 3.9% year-over-year.
The gap between domestic and overseas demand widened as automakers expanded their presence in Europe, Southeast Asia, Latin America, and the Middle East. Some domestic carmakers are targeting the premium segment with feature-rich models, while others focus on affordability, according to HSBC analysts. BYD, a global leader in EVs, faced challenges domestically but reported record overseas shipments in July.
Nonetheless, Chinese automakers face continued margin pressure from promotional activities and rising costs for lithium batteries and semiconductor memory, according to Deutsche Bank analyst Bin Wang.
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