China NEV sales grow in 2024 but price war takes bite out of margins
Foreign carmakers such as GM, Toyota and VW continued to lose ground to local rivals
09 January 2025 - 16:22
byQiaoyi Li, Zhang Yan and Brenda Goh
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Sales of EVs and plug-in hybrids, known collectively as new energy vehicles (NEVs), rose 40.7% to make up 47.2% of total car sales in China last year.
Picture: REUTERS
Beijing — China’s car sales maintained their pace of growth in 2024 as purchases of electric vehicles (EVs) and plug-in hybrids in the world’s largest car market hit a record amid a brutal price war and subsidised trade-ins for greener vehicles.
The outstanding growth in China in a stalling global EV landscape spelt good fortune for local carmakers such as BYD, Geelyand Xiaomi and expedited an industry shakeout in a competitive market.
It also benefited US EV giant Tesla, which reported record sales in China last year unlike its global sales.
Other foreign carmakers such as General Motors (GM), Toyotaand Volkswagen (VW) continued to lose ground to local rivals, however, with many of them struggling to sustain effective capacity usage at their Chinese plants.
Passenger vehicle sales were up 5.3% to 23.1-million units in 2024 for the fourth straight year of growth, in line with the 2023 pace, according to the China Passenger Car Association (CPCA).
Sales of EVs and plug-in hybrids, known collectively as new energy vehicles (NEVs), rose 40.7%, to make up 47.2% of total car sales last year and closing in on a 50% milestone.
Sales were buoyed by a programme likened to the US’s “cash-for-clunkers” stimulus in 2009. More than 6.6-million cars sold last year benefited from government subsidies of up to $2,800 for NEV purchases versus as much as $2,000 for more fuel-efficient combustion engine vehicles. Over 60% of the subsidised purchases went to NEVs, according to official data.
The authorities announced on Wednesday an extension of the vehicle trade-in subsidies into 2025 as part of an expandedconsumer trade-in scheme to revive economic growth.
“We expect the vehicle trade-in subsidy programme to boost full-year 2025 demand by 3-million units,” said Deutsche Bank analyst Bin Wang.
Despite the sales growth, China’s vehicle industry has seen a deteriorating profitability over the years, with sales profit margins falling to 4.4% in the first 11 months of 2024 from 6.2% in 2020, according to the CPCA.
Suppliers and dealers also suffered from an extended price war that forced them to cut component prices more or offer deeper discounts.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
NEWS
China NEV sales grow in 2024 but price war takes bite out of margins
Foreign carmakers such as GM, Toyota and VW continued to lose ground to local rivals
Beijing — China’s car sales maintained their pace of growth in 2024 as purchases of electric vehicles (EVs) and plug-in hybrids in the world’s largest car market hit a record amid a brutal price war and subsidised trade-ins for greener vehicles.
The outstanding growth in China in a stalling global EV landscape spelt good fortune for local carmakers such as BYD, Geely and Xiaomi and expedited an industry shakeout in a competitive market.
It also benefited US EV giant Tesla, which reported record sales in China last year unlike its global sales.
Other foreign carmakers such as General Motors (GM), Toyota and Volkswagen (VW) continued to lose ground to local rivals, however, with many of them struggling to sustain effective capacity usage at their Chinese plants.
Passenger vehicle sales were up 5.3% to 23.1-million units in 2024 for the fourth straight year of growth, in line with the 2023 pace, according to the China Passenger Car Association (CPCA).
Sales of EVs and plug-in hybrids, known collectively as new energy vehicles (NEVs), rose 40.7%, to make up 47.2% of total car sales last year and closing in on a 50% milestone.
Sales were buoyed by a programme likened to the US’s “cash-for-clunkers” stimulus in 2009. More than 6.6-million cars sold last year benefited from government subsidies of up to $2,800 for NEV purchases versus as much as $2,000 for more fuel-efficient combustion engine vehicles. Over 60% of the subsidised purchases went to NEVs, according to official data.
The authorities announced on Wednesday an extension of the vehicle trade-in subsidies into 2025 as part of an expanded consumer trade-in scheme to revive economic growth.
“We expect the vehicle trade-in subsidy programme to boost full-year 2025 demand by 3-million units,” said Deutsche Bank analyst Bin Wang.
Despite the sales growth, China’s vehicle industry has seen a deteriorating profitability over the years, with sales profit margins falling to 4.4% in the first 11 months of 2024 from 6.2% in 2020, according to the CPCA.
Suppliers and dealers also suffered from an extended price war that forced them to cut component prices more or offer deeper discounts.
Reuters
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