China's Auto Market Booms: NEV Sales Surge and Exports Soar in Early 2024

China's auto market experience high growth in the first five months of this year with a rise in NEV and auto exports

China's auto market experienced strong growth in the first five months of this year, with a significant rise in the new energy vehicle (NEV) sector and increasing auto exports.

From January to May, auto sales in China, the world's largest auto market, increased by 8.3 percent year-on-year to nearly 11.5 million units, according to the China Association of Automobile Manufacturers.

In May alone, auto sales were about 2.42 million units, a 1.5 percent year-on-year increase, and a 2.5 percent rise from April.

During the January-May period, the NEV sector continued to excel, reflecting China's ongoing efforts toward green and low-carbon development.

NEV production jumped 30.7 percent compared to the same period last year, reaching 3.93 million units, with sales rising 32.5 percent to 3.9 million units.

This rapid growth boosted NEVs' market share to 39.5 percent in May, up from 36 percent in April.

The association attributed the NEV growth to various supportive measures, such as promoting the replacement of traditional fuel cars with NEVs, encouraging NEV use in rural areas, and lifting purchase restrictions on NEVs.

China has been the global leader in NEV production and sales for nine consecutive years. As the country accelerates its electrification of the auto industry, the NEV sector's future looks promising.

The International Data Corporation (IDC) projected that by 2028, the market scale of NEVs in China’s passenger car market will exceed 23 million units, with a compound annual growth rate of 22.8 percent.

Auto exports also saw significant growth, with China exporting 2.31 million units from January to May, a 31.3 percent year-on-year increase.

Of these, 1.79 million units were traditional fuel cars, a 37.5 percent increase, while NEV exports totaled 519,000 units, a 13.7 percent rise.

Exports of plug-in hybrid electric vehicles tripled from the same period last year, although pure electric car exports slightly declined by 1.8 percent to 414,000 units.

Despite the positive trends, the association warned of challenges ahead, including slow domestic demand growth, intense competition, and increasing protectionism in international trade.