On October 13, Dongfeng Lantu launched its brand-new electric SUV, the Zhiyin. This vehicle is the latest competitor in the market, joining previous releases like the Leitao L60, Zeekr 7X, Zhijie R7, Avita 07, and the new ZhiMai LS6, all aimed squarely at challenging the Tesla Model Y.
The “golden September and silver October” marks a busy season for auto manufacturers, as many introduce new models in conjunction with a traditional spike in car sales. Data indicates that while production and sales in September experienced a year-on-year decline, there was a significant month-on-month increase. Notably, the sales figures for passenger vehicles ended a five-month downward trend, emerging as a highlight of the season.
“A record high in sales was achieved by Leap Motor on the last day of the National Day holiday, with over 17,000 units sold during the seven-day period,” shared Zhu Jiangming, founder, chairman, and CEO of Leap Motor, in a WeChat post on the evening of October 7.
In addition to Leap Motor, several other car companies reported record order volumes during the National Day holiday. Hongmeng Zhixing saw orders exceed 28,600, Xpeng reached 16,000, and Deep Blue reported 14,000 new orders, while Zeekr surpassed 10,000. Fan Junyi, General Manager of Geely Auto Sales Company, told reporters: “During the National Day holiday, overall sales for the Geely brand saw a significant uptick, with fuel vehicle sales up 29% year-on-year, and an even greater increase driven by our new energy models, including the Galaxy E5 and Xingyuan.”
According to reports, in September, China’s automobile production and sales reached 2.796 million and 2.809 million units, respectively, reflecting a year-on-year decline of 1.9% and 1.7%, yet a month-on-month growth of 12.2% and 14.5%. Specifically, production and sales of passenger vehicles, primarily for personal use, were 2.502 million and 2.525 million units, showing month-on-month increases of 12.6% and 15.8%, while year-on-year changes were slightly positive at 0.2% and 1.5%. This marked the end of a five-month decline.
“With robust national support for vehicle scrappage and renewal subsidies, and local policies coming into effect, alongside manufacturers launching new models for autumn, the passenger vehicle market is gradually recovering. Notably, the retail market remains strong, showing continued effects from the ‘golden September’ phenomenon,” commented Chen Shihua, Deputy Secretary-General of the China Association of Automobile Manufacturers.
To stimulate automotive consumption, a joint initiative from the Ministry of Commerce and 14 other departments introduced the “Consumer Goods Trade-in Action Plan” in March. This was followed in August by specifics on subsidy implementation for vehicle trade-ins. The standards were considerably raised for consumers trading in vehicles—subsidies for purchasing new energy vehicles increased from 10,000 to 20,000 yuan, while those for fuel vehicles rose from 7,000 to 15,000 yuan. Many localities promptly established relevant policies to accelerate this process. As of midnight on October 7, the Ministry of Commerce’s platform had received over 1.27 million applications for subsidies, driving new car sales beyond 160 billion yuan nationwide.
To take advantage of the trade-in policies, automakers have been speeding up the rollout of new models to cater to diverse consumer preferences. In September alone, over 50 new models or updates were launched, including the Passat Pro, Deep Blue L07, Aion RT, and Dongfeng Honda Lingxi L. Simultaneously, companies continue to expand promotional offers to draw in consumers. For instance, NIO now offers a 20,000 yuan optional equipment subsidy along with an energy top-up voucher for vehicle purchases.
“As we enter the ‘silver October’ phase, automakers and dealers are gearing up for an intense finish to the year. Implementing stronger incentives is certainly the most straightforward way to boost sales,” noted Yan Jinghui, a member of the Expert Committee of the China Automobile Circulation Association.
Amidst the recovery in passenger vehicle sales, a pronounced divide between new energy vehicles (NEVs) and traditional fuel vehicles is becoming clearer.
In September, Li Auto led NEV deliveries with 53,700 units, marking a 48.9% year-on-year increase. Huawei’s HarmonyOS vehicles reached monthly deliveries of 39,900, with the AITO series becoming a sales standout. Leap Motor recorded its highest monthly deliveries at 33,700, while XPeng achieved two-year highs with over 20,000 sales thanks to its MONA M03 model. Xiaomi Automotive also surpassed 10,000 in deliveries that month.
Looking at traditional automakers, those transitioning more swiftly to new energy technologies demonstrated clearer improvements in sales figures. BYD saw a record-breaking month with sales exceeding 410,000, while Geely Holdings marked a historic high with 308,000 units sold, reflecting a 17.8% year-on-year increase. Notably, sales of NEVs reached 152,500, growing by 59.6% and achieving a penetration rate of 49.5%.
Conversely, traditional joint-venture brands that have been slower to adapt, primarily relying on fuel vehicles, are witnessing declines. In September, FAW-Volkswagen sold 148,000 vehicles, a drop of 18.2%, while GAC Toyota and SAIC-GM saw even steeper declines, selling 72,000 and 22,000 units, respectively.
Data shows that in September, China’s NEV production and sales totaled 1.307 million and 1.287 million, marking year-on-year increases of 48.8% and 42.3%. NEV sales accounted for 45.8% of all new car sales, achieving historical highs. In contrast, domestic traditional fuel vehicle sales fell to 940,000, down 30% year-on-year, underscoring the profound structural changes within China’s automotive market, driven by electrification and intelligence.
The growth of NEV sales can be attributed to the expanding variety of products available; in September, over 80% of new models launched were NEVs, providing consumers with ample options. Additionally, product competitiveness has improved, particularly with plug-in hybrid electric vehicles (PHEVs) offering strong alternatives to traditional fuel vehicles. “PHEVs have outperformed traditional fuel vehicles across several metrics including energy consumption, performance, reliability, intelligence, usage costs, and pricing,” stated Ouyang Minggao, an academician at the Chinese Academy of Sciences and Tsinghua University professor.
“The current policy environment favoring NEVs generally surpasses that of traditional fuel vehicles. The subsidies for trade-ins significantly favor NEVs, and this has been a crucial factor in their sustained sales growth,” Chen Shihua predicts total NEV sales in China this year could reach 12 million, far exceeding earlier estimates.
The escalating competition is pushing for high-quality development. “The long-range smart edition is priced at an attractive 179,900 yuan,” announced Shao Mingfeng, General Manager of Lantu Automobile Sales and Service Co., on October 13, prompting gasps in the audience, who noted, “Finally, a company has offered a mid-sized electric SUV priced under 200,000 yuan!”
Despite the rebound in passenger vehicle production and sales, the price war ignited in the market since early last year shows no signs of abating. National Bureau of Statistics data reveals that in September, the prices of NEVs and fuel cars decreased by 6.9% and 6.1%, respectively. Cui Dongshu, Secretary-General of the Passenger Car Association in China, highlighted that in the first nine months of this year, 195 models saw price cuts, well above 150 models in 2023 and significantly exceeding 95 models in 2022.
Price competition remains a common strategy among businesses in a market economy. By lowering prices in response to shifts in consumer demand, companies can expand their market share, forcing weaker brands and inefficient capacities out and enabling a natural selection process within the industry. Nonetheless, a price war can be a double-edged sword; if it leads to unhealthy “inward” competition, it could harm reasonable profit margins for companies while also squeezing upstream and downstream suppliers, jeopardizing the industry ecosystem.
This year’s ongoing price war has intensified market turbulence, placing unprecedented pressures on automotive dealers. “In the profit structure for dealers, new car sales are facing significant losses with negative gross profit contributions, and these losses are expanding,” stated Shen Jinjun, President of the China Automobile Circulation Association. He cautioned manufacturers to align production with sales and avoid blind overproduction in their pursuit of market share or overly aggressive price reductions.
Geely Holding Group Chairman Li Shufu urged that given the current landscape of insufficient market demand and fierce competition, automakers should focus on innovation and the development of new types of productive capacities, delivering high-quality products and services to create new value for customers. This approach can help navigate the pitfalls of price wars and avoid unhealthy competition, ultimately leading to true high-quality industrial development.
