Data from the China Passenger Car Association reveals that in the first twelve days of July, the national passenger vehicle market recorded 443,000 retail sales.

This figure represents a 15% decline compared to the same period last July and a 1% decrease from the previous month.

Year-to-date cumulative retail sales stand at 9.144 million units, a drop of 20%.

For the same period, wholesale deliveries from manufacturers totaled 379,000 units, marking a 26% year-on-year fall and a 17% month-on-month contraction.

Year-to-date cumulative wholesale volume is 12.926 million units, down 6%.

In the new energy vehicle segment, retail sales for July 1-12 reached 280,000 units, an 8% decrease year-on-year and a 3% decline month-on-month.

Cumulative NEV retail sales for the year have reached 4.984 million units, down 14%.

NEV wholesale deliveries from manufacturers for the period were 262,000 units, falling 9% year-on-year and 15% month-on-month.

Year-to-date cumulative NEV wholesale volume is 7.05 million units, showing a 4% increase.

Penetration Rates

For the first twelve days of July, the retail penetration rate for new energy passenger vehicles was 63.1%.

The NEV wholesale penetration rate for manufacturers during the same period was 69.1%.

Production Figures

During the first two weeks of July, production of pure fuel light vehicles stood at 159,000 units, a sharp 56% decrease year-on-year and a 17% drop from the previous month.

Overall production of hybrid and plug-in hybrid vehicles was 145,000 units, down 9% year-on-year but up 7% compared to the previous month.

Analysis of Retail Sales Trends

In the first week of July, average daily retail sales were 34,000 units, down 15% year-on-year but up 4% from the previous week of June.

The second week saw average daily sales of 39,000 units, a 16% decline year-on-year and a 4% decrease month-on-month.

The cumulative 443,000 retail sales for July 1-12 reflect the traditional off-season characteristics, with overall consumer demand remaining weak.

This softness in retail demand is the primary driver behind the weakening wholesale figures.

Impacted by sluggish retail performance, dealer inventory turnover efficiency has decreased, leading to accumulating inventory pressure.

This has forced distribution channels to reduce orders from manufacturers, creating a chain effect of weak retail sales leading to weak inventory replenishment and, consequently, declining wholesale numbers.

There are some bright spots providing structural support within the market.

Demand related to graduation purchases and family road trips during the summer holiday has led to a modest release of demand for family sedans, SUVs, and entry-level new energy vehicles, helping to stabilize the baseline retail volume.

Furthermore, the ongoing nationwide vehicle replacement subsidy policy is effectively stimulating demand for replacing older models, providing incremental support for retail sales of mid-range vehicles.

New energy vehicle models, benefiting from product updates, policy incentives, and cost-performance advantages, are demonstrating significantly greater market resilience compared to fuel-powered vehicles.

This resilience is continuously offsetting the substantial decline in fuel vehicle retail sales, alleviating the overall downward pressure on the terminal market.

Analysis of Wholesale Trends

In the first week of July, average daily wholesale deliveries from manufacturers were 25,000 units, a 35% year-on-year decrease and a 13% drop from the previous month.

The second week saw average daily wholesale of 36,000 units, down 20% year-on-year and 19% month-on-month.

The cumulative 379,000 wholesale units for the period are primarily constrained by the pronounced off-season market characteristics.

The demand pull-forward from manufacturers' sales push in June to meet half-year targets has depleted current market demand.

Compounded by the high base from the same period last year, this has significantly dragged down current wholesale data.

Concurrently, weak terminal demand and high channel inventory are putting pressure on dealer cash flow, resulting in low willingness for proactive inventory replenishment.

This makes it difficult for automakers to push inventory onto dealers, leading many brands to opt for production controls and output reductions, further hampering wholesale shipments.

There are, however, structural supporting factors at the wholesale level that are mitigating some of the downward pressure.

On the policy front, the nationwide vehicle trade-in program and local purchase subsidies continue to be implemented.

Coupled with the enforcement of new national standards for new energy vehicles, a concentrated rollout of compliant new models is providing structural incremental volume for manufacturer wholesale.

On the production side, July has a relatively sufficient number of working days.

Some automakers are leveraging stable production capacity to ensure shipments of new products.

Simultaneously, automotive exports continue to maintain robust growth, with overseas orders effectively absorbing domestic surplus production capacity, serving as a crucial stabilizing force for the wholesale sector.

Overall, the positive factors primarily provide structural counterbalance and are currently insufficient to effectively reverse the overall downward trend in domestic wholesale volume.