CPCA forecasts weak China NEV retail sales in October as peak season falters

• China’s NEV retail sales are expected to come in at 1.07 million in October, down 16.5% year-on-year.
• Overall passenger car retail sales are forecast at 1.6 million, down 28.9% year-on-year.

China’s retail sales of new energy vehicles (NEVs) are expected to total about 1.07 million in October, with penetration holding at an elevated 66.9% amid continued pressure on the broader auto market.

The China Passenger Car Association (CPCA) released the forecast in a report on Friday, saying the boost from traditional seasonal factors had weakened significantly.

The forecast indicates that October NEV retail sales will decline by 16.5% year-on-year and by about 1.3% compared to September. The penetration rate is expected to fall by 0.1 percentage points from September’s record high of 67.0%.

The CPCA expects overall passenger car retail sales to total about 1.6 million in October, down 1.1% from September and 28.9% year-on-year, deepening the annual decline from September’s 28.0%.

The forecast suggests China’s auto market still lacks momentum for a meaningful recovery in October following a weak September, with high NEV penetration failing to reverse sluggish overall demand.

Showroom traffic rose modestly during the National Day holiday in early October but quickly fell back afterward, the CPCA said. Weak household income expectations and a wait-and-see attitude fueled by competition among dealers have shown no fundamental improvement.

A survey of automakers in early October showed most leading manufacturers remained cautious about the pace of fourth-quarter sales, the CPCA said. Most automakers had achieved less than 60% of their annual sales targets in the first 3 quarters.

Despite pressure to boost fourth-quarter volumes, efforts to curb excessive competition and pressure on dealer profitability have limited room for price cuts to drive sales, prompting generally cautious inventory strategies in October.

Weekly trends also point to a lack of sustained demand. Orders accumulated during the National Day holiday lifted average daily retail sales to about 58,000 in the second week, before they fell back to about 47,000 in the third week.

The CPCA expects average daily retail sales to recover modestly to about 49,000 in the fourth week as deliveries of models launched in the third quarter settle into a steady pace, then rise to about 79,000 in the fifth week on a month-end sales push.

Previously released CPCA data shows China’s passenger NEV retail sales totaled 520,000 from October 1 to 18, down 13% year-on-year and 2% from the same period in September, with penetration at 65.9%.

September NEV retail sales fell 16.7% year-on-year, marking the ninth consecutive monthly decline. Sales in the first 9 months totaled 7.758 million, down 12.8%.

The gasoline vehicle market continues to be weighed down by high oil prices, while NEV demand remains relatively stable, the CPCA said. Although several new models are still due to launch before year-end, longer timelines from unveiling and pre-sales to delivery have increased waiting times for buyers.

NEV sales growth has reached a plateau, but penetration is expected to remain high, while the broader passenger car market is still searching for a bottom, the CPCA said.

Tesla’s share rose to 6.0%, while Li Auto and Nio dropped out of the top 10 in NEV retail sales.