BEIJING (Reuters) – China’s auto sales unexpectedly fell in October compared with a year earlier, snapping an eight-month streak of growth, as consumer confidence weakened amid a reduction in tax exemptions and government subsidies.
Car sales fell 0.8% to 2.27 million units last month, compared with a 6.6% increase in September, according to data released on Monday by the China Passenger Car Association.
Growth in sales of electric vehicles and plug-in hybrids slowed, recording a 7.3% increase, compared to a 15.5% gain in September.
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The final results were well below preliminary data released last week, which predicted a 6% growth in sales compared to the previous year and a 17% increase in sales of so-called new energy vehicles.
“Wholesale car sales (to dealers) exceeded expectations in the last week of October, and preliminary figures were compiled based on the assumption that retail sales should be close to wholesale sales, which ultimately resulted in increased inventories,” said Cui Dongshu, secretary-general of the association.
With tax rebates of up to 30,000 yuan ($4,211.71) on the purchase of electric and plug-in hybrid vehicles halved from 2026 onwards, a growing number of automakers — including Xiaomi, Nio and Li Auto — have offered subsidies of up to 15,000 yuan to encourage orders for delivery next year.
Meanwhile, government subsidies that spurred more than 12 million car trade-ins this year are winding down as the consumer subsidy program approaches its end at the end of the year.
Nearly 20 provinces and cities have suspended or restricted subsidized car trade-in programs, which has negatively affected consumers’ purchasing activity, Cui said.
He added that young people’s lack of interest in buying a car has also resulted in a shortage of first-time car buyers.
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Tepid demand only intensifies competition in the world’s largest auto market.
