The growth of car sales in China slowed in July, partly due to weakening demand for hybrid vehicles. This comes as regulators in the world’s largest car market crack down on an ongoing "price war" that has impacted the industry.
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According to data released on Friday by the China Passenger Car Association (CPCA), sales rose by 6.9% compared to July 2024, reaching 1.85 million vehicles. However, this marks a significant slowdown from the 18.6% year-on-year growth recorded in June.
Sales growth of new energy vehicles (NEVs) — which include fully electric and plug-in hybrid cars — also slowed, rising by just 12% compared to 29.7% in June. Despite the slowdown, NEV sales continued to outperform gasoline-powered cars for the fifth consecutive month.
Demand for hybrid vehicles remained weak. Combined sales of plug-in hybrids and range-extended vehicles dropped by 3.6% year-on-year in July. This decline is attributed to improvements in battery technology and charging infrastructure, which have eased consumer concerns about fully electric vehicles.
Electric carmakers such as Leapmotor, Xiaomi, and XPeng benefited from this shift, recording record sales in July. However, the trend has put pressure on companies like BYD and Li Auto, which rely heavily on hybrid models for both sales and profits.
BYD, China’s largest competitor to Tesla and a key player in the sector’s price-cutting campaigns, saw its production decline in July — the first drop in 17 months.
