(Yicai) May 11 -- China’s retail car sales tumbled 22 percent last month from a year earlier, as high international oil prices and changes to the country’s new energy vehicle purchase tax dragged on demand.

More than 1.4 million passenger vehicles were sold through retail channels in April, which was also a 16 percent drop from the previous month, according to data released by the China Passenger Car Association today.

April’s weaker-than-expected performance was mainly due to high oil prices, which led to a sharp decline in sales of gasoline-powered vehicles, particularly in the compact vehicle segment, said CPCA Secretary-General Cui Dongshu.

Retail sales of internal combustion engine cars, including sedans, sport utility vehicles, and multi-purpose vehicles, plunged 37 percent to 530,000, accounting for 84 percent of the overall decline in retail sales, up from 52 percent in March.

Meanwhile, NEV adoption topped 60 percent for the first time, climbing to over 61 percent from 52 percent a year earlier.

In the first four months of the year, retail auto sales sank 19 percent year on year to 5.67 million, compared with a 16 percent decline in the first quarter, the CPCA’s figures also showed.
NEV sales diverged in April. B-class (mid-size) models sold at wholesale jumped 27 percent to 243,000, accounting for 31 percent of the overall pure electric vehicle market, while A00-class (micro/mini) model sales plunged 55 percent to 70,000, with their market share dropping to 9 percent.

Since Jan. 1, NEV buyers have had to pay a 5 percent auto purchase tax, rather than being fully exempt, with the tax benefit capped at CNY15,000 (USD2,207) per vehicle.

Exports of passenger vehicles reached 776,000 in April, up 80 percent from a year ago and accounting for 36 percent of Chinese carmakers’ total sales, per the CPCA data. Narrow-definition NEVs made up nearly 53 percent of that, surpassing 50 percent for the first time, with domestic brand shipments soaring 91 percent to 653,000.

Automakers have little room to raise prices now because competition is fierce and the market remains dominated by replacement demand, Cui pointed out. Mid- and high-end models can still support decent margins, but raising prices on lower-priced models would risk a sharp drop in sales, he said.

Battery export prices have not risen, domestic cost pressure remains limited, and price cuts still dominate the market, Cui added.

In May, the CPCA expects month-on-month improvement but continued year-on-year weakness. The recent Labor Day holiday likely supported order intake before the break and deliveries afterward, but high fuel prices, weak consumer confidence, and tighter credit conditions are likely to crimp domestic recovery.

Exports should keep growing quickly, and NEV adoption will remain above 60 percent, according to the CPCA.

Editor: Futura Costaglione