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BEIJING, August 9 (TMTPOST)— China’s auto industry became more optimistic on the market in the following months of the year as it gave an upbeat outlook despite a significant slowdown in the growth for the past month.

Source: Visual China

The retail passenger vehicle sales in China increased 20.4% year-over-year (YoY) to 1.818 million vehicles in July, representing the second largest monthly YoY growth in the past decade, according to China Passenger Car Association (CPCA).

Data from CPCA showed new energy vehicles (NEVs) including battery electric vehicles (BEVs) and plug-in hybrids, the hottest sector in the industry, were sold 486,000 units in July, suggesting a 117.3% YoY increase, but the NEV retail sales decreased about 8.5% from the previous month’s record, which is the first monthly decline in sales since March.

As a traditional off season in the start of the third quarter of the year, July saw NEV sales cooling following the record high sales in June, when the Chinese government announced to cut the 10% purchase tax levied on certain passenger cars by half. Besides the base effect driven by the economic stimulus, the monthly drop in July partly came from the hot temperature, which hurt consumers’ shopping appetite since they had to reduce outdoor activities including going to car dealerships.

Three prominent Chinese electric vehicle (EV) makers—NIO, Xpeng and Li Auto posted more than 20% month-over-month (MoM) sales decline in July, and Tesla China sold 28,217 EVs that month, much less than the record delivery of 78,906 vehicles the company made in June, according to CAPA. However, BYD maintained triple-digit monthly growth since entering into 2022. The Buffett-backed EV giant sold 162,530 NEVs in July, tripling the sales from a year earlier, and set monthly sales record for the fifth consecutive month.

CAPA played down the seasonal factors in July and lifted its NEV sales forecast for 2022 to an annual record of 6 million, up from the 5.5 million units that the industry group projected in late 2021. Noting the new projection is a prudent one, CAPA added it could upgrade the outlook in the beginning of the fourth quarter. It expected growth of NEV market in the coming months mainly depends on improvement of the supply side, and the sales would keep positive MoM growth as auto makers roll out their new products and some of them complete their capacity expansion.