(Yicai) June 10 -- China's car production and sales climbed to all-time highs last month, driven by government policies to boost domestic consumption and rising exports, amid intense price competition in the world’s biggest auto market.

Passenger car output rose 12.6 percent to 2.27 million units in May from a year earlier, according to data from the China Passenger Car Association.

Retail sales of passenger cars expanded by more than 10 percent for the fourth time this year, jumping 13.3 percent to 1.93 million to top the 1.8 million record set in May 2018, the data also showed. Wholesale sales rose 12.8 percent to record 2.31 million units.

BYD, Geely Automobile, and Changan Automobile led sales with 293,000, 205,000, and 136,000 units, respectively. Only four car joint ventures with foreign automakers made it into the top 10, including those with Volkswagen and Toyota Motor as shareholders.

Shenzhen-based BYD slashed the prices of 22 of its vehicle models by between 10 percent and 34 percent on May 23, triggering cuts by other automakers amid a protracted price war.

Stimulated by government policies such as subsidies for scrappage and trade-ins as well as a purchase tax waiver for new energy vehicles, NEV sales surged by over 28 percent to 1.02 million.

NEV adoption stood at 52.9 percent, with that of vehicles produced by Chinese and luxury brands reaching 68.7 percent and 37.5 percent, respectively. However, the rate for joint ventures between Chinese and foreign producers was only 4.3 percent.

Car exports jumped 14 percent to 448,000 last month, with NEVs accounting for nearly 45 percent, compared with 28 percent a year earlier, according to the data. Exports by Chinese makers surged 18 percent to 375,000.

Despite declining exports to Russia at the start of the year, Chinese brands still maintain a market share of over 55 percent in the country, the CPCA noted. Considering the current situation of Russia's auto industry, Chinese exports to the nation are expected to recover to a certain level.

Auto production and sales will increase further this month, while growth will gradually decelerate, the CPCA predicted.

Prices of battery raw materials are declining, making NEVs more affordable. For example, lithium carbonate has plunged to CNY60,000 (USD8,350) per ton from CNY600,000 (USD83,515) per ton at the beginning of 2023, CPCA Secretary-General Cui Dongshu said.

Moreover, factory gate prices dropped 3 percent this month from a year earlier, with overall costs declining, leaving space for reasonable price promotions among carmakers, Cui noted.

From last July to this May, the price competition for both internal combustion engine vehicles and electric cars has been relatively moderate, Cui pointed out, adding that he hopes this mild competitive environment can be maintained.

Editor: Futura Costaglione