• China's passenger NEV retail sales totaled 614,000 in August 1-23, with retail penetration rising to 64.3%.
• NEV wholesale sales swung to 5% year-on-year growth from a 3% decline in the first 16 days.

China's retail sales of passenger new energy vehicles (NEVs) fell at a slower pace in the first 23 days of August, continuing to outperform the broader auto market and signaling a modest improvement in demand early in the second half of the month.

China's passenger NEV retail sales totaled 614,000 in August 1-23, down 12% from a year earlier and 2% from the same period last month, according to data released by the China Passenger Car Association (CPCA) on Wednesday.

NEV retail sales totaled 399,000 in the first 16 days of August, down 15% year-on-year. The latest cumulative figures imply retail sales of about 215,000 NEVs during August 17-23.

Overall passenger vehicle retail sales totaled 956,000 during the period, down 22% year-on-year and 2% from the same period last month. NEV retail penetration rose to 64.3% from 63.6% in the first 16 days.

Year to date, passenger NEV retail sales totaled 6.283 million, down 12% year-on-year. Overall passenger vehicle retail sales fell 20% to 11.129 million.

Wholesale performance was stronger. Passenger NEV wholesale sales totaled 714,000 in August 1-23, up 5% year-on-year and 4% from the same period last month, with wholesale penetration at 70.5%.

Overall passenger vehicle wholesale sales totaled 1.012 million during the period, down 20% year-on-year but up 2% from the same period last month. Year-to-date NEV wholesale sales rose 7% to 8.962 million.

However, the recovery in overall demand remained slow. Average daily passenger vehicle retail sales totaled 47,000 in the third week of August, down 22% year-on-year and 4% from the same period last month.

The CPCA said domestic consumption and manufacturing activity remained weak, while consumers were still cautious about big-ticket purchases such as cars. Flooding in some regions also reduced showroom traffic and sales.

High oil prices continued to weigh on gasoline vehicle demand. Disruptions to shipping through the Strait of Hormuz led to multiple increases in China's domestic fuel prices in July, further raising the cost of operating gasoline vehicles.

Nationwide production of conventional-fuel light vehicles fell 59% year-on-year to 270,000 in the first 3 weeks of August and was down 15% from the same period last month. Production of hybrid and plug-in hybrid vehicles fell 20% year-on-year to 259,000.

Meanwhile, NEV prices remained stable, but persistent wait-and-see sentiment among consumers prevented a faster release of demand.

The CPCA previously forecast that August NEV retail sales would reach about 1.04 million, up around 9.4% from July, with retail penetration potentially hitting a record 65.8%.

Based on the latest cumulative figures, about 426,000 NEVs would need to be sold at retail during August 24-31 to meet that forecast. The month-end sales push and the conversion of orders generated by the Chengdu Auto Show will be key.

The CPCA expects the decline in the passenger vehicle market to continue narrowing as policies to support consumption are gradually implemented and the comparison base improves, building demand ahead of the traditional peak sales season.