China NEV retail sales drop 13% in Oct 1-25 as peak-season demand stays weak

• NEV retail sales totaled 753,000 units, down 1% from the same period in September.
• Overall passenger car retail sales fell 26% year-on-year, while NEV wholesale sales rose 3%.

China's passenger new energy vehicle (NEV) retail sales fell 13% year-on-year in the first 25 days of October, extending weakness during the traditional peak selling season, though the decline was smaller than in the broader passenger car market.

NEV retail sales totaled 753,000 units from October 1 to 25, down 1% from the same period in September, according to data released by the China Passenger Car Association (CPCA) on October 28.

The year-on-year decline was unchanged from the first 18 days of October, while the drop from the same period last month narrowed from 2%.

Year-to-date NEV retail sales totaled 8.51 million units, down 13% year-on-year.

NEV retail penetration stood at 65.7% in the first 25 days of October, down 0.2 percentage points from 65.9% in the first 18 days and below September's record 67.0%.

In a forecast released on October 23, the CPCA projected full-month NEV retail sales of about 1.07 million units, implying a 16.5% year-on-year decline and a penetration rate of 66.9%.

NEV retail sales fell 16.7% year-on-year in September, marking the ninth consecutive month of declines. If full-month sales fail to return to growth in October, it would mark the tenth straight monthly drop.

In contrast to retail sales, NEV wholesale sales continued to grow. Wholesale volumes totaled 1.008 million units from October 1 to 25, up 3% year-on-year and 6% from the same period in September.

The year-on-year growth rate slowed from 5% in the first 18 days. Year-to-date NEV wholesale sales totaled 12.46 million units, up 9% year-on-year, while NEV wholesale penetration stood at 72.9% in the first 25 days of October.

The broader passenger car market remained under pressure. Retail sales totaled 1.145 million units from October 1 to 25, down 26% year-on-year and unchanged from the same period in September. Year-to-date retail sales totaled 14.48 million units, down 22% year-on-year.

Daily passenger car retail sales averaged 50,889 units from October 19 to 25, up from 47,109 units in the previous week. The year-on-year decline narrowed to 26% from 29%, while sales were down 5% from the same period in September.

National Day auto shows, local subsidies and automakers' peak-season promotions supported a relatively modest recovery, the CPCA said. Persistently high global oil prices continued to push up vehicle use costs, leaving demand for gasoline-powered vehicles weaker than expected.

Wholesale sales also faced pressure. Total passenger car wholesale sales came in at 1.384 million units in the first 25 days of October, down 22% year-on-year but up 3% from the same period in September.

Daily passenger car wholesale sales averaged 75,921 units from October 19 to 25, down 24% year-on-year but up 14% from the same period in September, indicating a faster wholesale pace than last month.

Most NEV brands currently lack strong-selling models, but manufacturers still need to maintain relatively steady production schedules to keep supply chains running and meet production and sales targets, the CPCA said.

Weak retail demand also added to inventory pressure. Total inventories at NEV-only manufacturers rose to 880,000 units at the end of September, up 30,000 units from the end of August. Below-expectation retail sales left manufacturers and their distribution channels facing considerable inventory pressure, the CPCA said.

However, the CPCA noted that a recent sharp decline in lithium carbonate prices could help lower battery costs. Anticipated export tax rebate adjustments and the possibility of tighter trade restrictions next year could also prompt NEV exporters to bring shipments forward into the fourth quarter.