Shanghai (ZXZC)- China's domestic passenger vehicle ("PV") retail sales are anticipated to reach 1.83 million units in June 2023, which should climb 5% from the previous month, but fell 5.9% from the previous year mainly due to the high base for the year-ago period, according to the China Passenger Car Association ("CPCA").

Of the PVs retailed in China in June, around 670,000 units were expected to be new energy vehicles (NEVs, referring to battery electric vehicles and plug-in hybrid electric vehicles), representing a 15.5% growth month-on-month and a 26% jump year-on-year.

For clarity, the passenger vehicles hereby refer to the cars, SUVs, and MPVs locally produced in the world's largest auto market.

According to the CPCA’s data, in the first week of June, the average daily retail sales of major PV manufacturers reached 31,100 vehicles, reflecting a decline of 42% compared to the beginning of May. This decrease can mainly be attributed to the high sales volume during the May Day holiday, which created a higher base. Moving into the second week, the average daily PV sales increased to 42,900 vehicles, but it still experienced a decline of 14% compared to the same week of May.

However, as the mid-month promotional activities commenced, the automotive market gradually regained momentum in the third week, with average daily retail sales reaching 57,500 vehicles, showing a 21% increase compared to the third week of May. The arrival of the Dragon Boat Festival holiday in the fourth week further boosted consumer interest, and the average daily retail sales are estimated to reach 62,000 vehicles, reflecting a growth of 26% compared to the corresponding week of May.

Heading into the fifth week, PV manufacturers' inventory surged due to end-of-quarter push, leading to an estimated average daily retail sales volume of 113,700 vehicles, marking a significant 32% jump compared to the end of May.

On June 21, China’s Ministry of Finance, State Administration of Taxation, and Ministry of Industry and Information Technology jointly released an announcement titled "Announcement on the Continuation and Optimization of the Vehicle Purchase Tax Exemption Policy for New Energy Vehicles." The announcement stated that the NEVs purchased between Jan. 1, 2024, and Dec. 31, 2025, would be exempt from vehicle purchase tax. Furthermore, for the NEVs purchased between Jan. 1, 2026, and Dec. 31, 2027, the vehicle purchase tax would be reduced by halved. This policy release has stabilized market expectations and aims to provide strong support for the future medium- to long-term development of the NEV market.