The Chinese engine is sputtering: domestic sales are collapsing

The The decline in the Chinese car market continues an. Im July they shrank Sales up 21.1 percent to 1.47 million vehicles, as the China Passenger Car Association announced on Tuesday.

The decline was therefore somewhat smaller than in the previous month. At the same time Exports shot up. A total of 923,000 vehicles were sold abroad, 88 percent more than in the previous year.

Domestic sales in China have been declining for months. Car sales had already fallen by 23.4 percent in June; in the first half of the year the decline was around 20 percent. The main reasons are weak consumer sentiment, the tense economic situation and reduced government subsidies. Many Chinese households are postponing major purchases such as buying a car.

Vehicles in the lower price segment are particularly hard hit. Buyers with low purchasing power are holding back, while wealthier customers are more likely to choose high-quality, technologically advanced models.

German car manufacturers under pressure

The difficulties in the world’s largest car market are also causing problems for the German car industry – on two fronts. BMW, Volkswagen and Mercedes are selling fewer vehicles in China and have recently recorded significant drops in profits.

At the same time, competitive pressure from Chinese suppliers is growing in traditional sales markets. Market shares are increasingly shifting in favor of Chinese manufacturers. German and Japanese brands are losing ground, while BYD, Geely, Nio and other Chinese producers are scoring points primarily with electric and hybrid vehicles.