China continues to see car sales decline and economic recovery after the removal of the ‘Zero Corona’ policy is not progressing.
In January-February 2023, Chinese vehicle sales (on a factory basis) fell by 15.2% year-on-year to 3.625 million units. This is likely to be due to a reaction to the end of the passenger car purchase tax halving (reduction in the tax rate from 10% to 5%) implemented in the June-December period of the previous year, indicating that the economic recovery following the removal of the ‘Zero Corona’ policy is not yet robust.
Against this backdrop, passenger car sales with discounts have been noticeable since the beginning of March, amounting to more than 40 brands. Geely Automobile is offering price cuts of up to RMB 30,000/vehicle until the end of March. Beijing Hyundai is offering price cuts of up to RMB 55,000/unit to users who purchase eight eligible models by the end of March. Some dealers are also running rather bold promotional campaigns, with one FAW Toyota dealer offering a free Vios to buyers of the bZ4X and one Guangqi Honda dealer offering a free Fit to buyers of the Breeze PHEV, creating a buzz.
Some analysts believe that this series of price cuts is part of a strategy to regain market share for petrol-powered vehicles, now that the NEV subsidy policy has ended.