In April 2023, China's automotive market shrank significantly, as evidenced by data from the China Passenger Car Association (PCA). Passenger car sales fell by 21.5 percent compared to the previous year, marking the weakest April figure since 2022, when COVID-19 lockdowns impacted sales.
The demand for traditional combustion engines, particularly gasoline-powered vehicles, collapsed by around one third. Cui Dongshu, Secretary General of the PCA, stated that rising fuel prices due to the Iran war and the associated oil price shock had severely burdened the market.
The weakness in the automotive market is seen as a warning signal for China's overall economic development, as cars are among the largest purchases for private households. Hopes that electric vehicles could benefit from this situation were dampened by a 6.8 percent decline in sales of alternative fuel vehicles in April.
The automotive industry thus faces significant challenges, as sales of electric vehicles and plug-in hybrids are insufficient to offset losses in combustion engine sales. The situation could worsen if economic conditions are not stabilized.
