China’s car sales rise in May, but price wars cloud outlook

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BEIJING, (Reuters) – China’s car sales rose for a fourth consecutive month in May, but slower increases across major automakers highlighted concerns over aggressive price competition in the world’s largest auto market.

Sales grew 13.9% from a year earlier to 1.96 million vehicles last month, slowing from 14.8% growth in April, China Passenger Car Association (CPCA) data showed on Monday.

The stacked bar shows new energy vehicle sales and sales of other fuel car types in China.
The stacked bar shows new energy vehicle sales and sales of other fuel car types in China.
Sales of electric vehicles and hybrids rose 28.2% year on year, down from a 33.9% gain in April.
The line chart shows the share of new energy vehicle sales and sales of other fuel type cars in China.
The line chart shows the share of new energy vehicle sales and sales of other fuel type cars in China.

Leading EV maker BYD reported decelerating annual passenger vehicle sales growth to 14.1% last month from April’s 19.4% despite a new round of subsidies and incentives late in the month.

Other major automakers, including Geely and Chery, also reported slower growth as the industry’s attention shifted to price wars that have raised concern over a potential market shakeout.

Authorities have warned that such price wars threaten the industry’s long-term health, with the sentiments echoed by leading manufacturers such as BYD, Chery and Xiaomi.

The CPCA’s secretary-general, Cui Dongshu, said the industry should focus on quality and technology innovation and that leading automakers should lower their sales targets for this year.

CPCA data also showed that car exports rebounded, rising 13.5% year on year in May, reversing a 2% decline in April.

Reporting by Qiaoyi Li, Zhang Yan and Brenda Goh Editing by David Goodman and Louise Heavens