China's passenger vehicle sales fell for a second month in July, as discounts and government support measures failed to persuade consumers wary of buying cars amid a sputtering economy and a prolonged slump in the housing market.
Automakers are concerned about a demand slowdown as the world's second-largest economy loses its post-pandemic bounce.
Car sales totalled 1.79 million units in July, down 2.6% from last year, data from the China Passenger Car Association (CPCA) showed, the second contraction in a row after a 2.9% slide in June.
Still, for the first seven months of the year, sales were up 1.7% at 11.44 million units.
Chinese automakers continued to bet on overseas markets, as domestic growth eased, with exports soaring 63% in July year-on-year following a 56% leap in June.
Rivalries in China's automobile market, the world's largest, have intensified as automakers struggle with weakening demand, deepening price competition.
Price cuts triggered by Tesla at the start of the year have roped in 40-plus brands in China and have shown few signs of easing, with General Motors (GM.N) and Volkswagen (VOWG_p.DE) joining a fresh round of cuts in July.
Carmakers are expected to continue offering discounts for products in some segments and some of them may even ramp up discounting, said Cui Dongshu, the CPCA secretary general.
New energy vehicles (NEVs), which have underpinned China's auto sales growth, are also losing steam.
Sales of NEVs, which include pure battery electric vehicles (EVs) and plug-in hybrids, were up 31.9% in July, making up 35.8% of the total car sales. The segment recorded a 3.6% dip in sales in July over June.
As part of efforts to revive sluggish consumer demand, authorities rolled out measures to boost auto consumption last month. In June, they extended a purchase tax break on NEVs until 2027. With 31,423 cars sold in China in July, Tesla's market share in China's EV market fell to the lowest in nine months, according to a Reuters calculation based on CPCA data.
