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There were 1.976 million new vehicles sold and 2.032 million units made in February in China, increasing 13.5% and 11.9% from a year earlier, respectively, data from the China Association of Automobile Manufacturers (CAAM) released on Friday showed. The sales and output climbed 19.8% and 27.5% from the previous month, respectively, signaling a strong recovery from the start of the year. In January, produced vehicles fell 34.3% year-over-year (YoY) to 1.594 million, representing a 33.1% month-over-month (MoM) decline, and vehicles sold dropped 35% YoY to 1.649 million, down 35.5% from a month ago, CAAM previously reported.

Including battery electric vehicle and plug-in hybrid electric vehicles, new energy vehicles (NEVs) are the major driving force for the recent rally as a sector accounts for 25.7% of China’s auto market in February. Sales of NEVs that month gained 55.9% YoY and NEVs made in China up 48.8%, CAAM data showed. January saw NEV sales and output dropped 6.9% and 6.3% respectively, and the first two months of the year totaled 525,000 units and 552,000 units, up 20.8% and 18.1% YoY, compared with the auto sales and output in total down 15.2% and 14.5% respectively, according to CAAM.

Another industry group unveiled the same trend of recovery earlier this week. Retail sales of passenger vehicles grew 10.4% YoY to 1.39 million units with a monthly increase of 7.5%, in which the NEV sales jumped 61% YoY to 439,000 units, representing 32.8% MoM growth, the China Passenger Car Association (CPCA) data showed.

The national NEV purchase subsidy policy expired at the end of 2022 did affect sales in January, while the market has gradually returned normal, partly due to measures to boost demand introduced by many local governments as well as offline activities reopening such as auto shows, CPCA commented upon data released. The auto industry body cautioned last week that it still has to take some time for consumers to change their wait-and-see sentiment due to uncertainties of macroeconomic policies and vehicle pricing.

Tesla's Chinese rivals have posted recovery in the beginning of this month. BYD Co., the largest EV manufacturer in China as well as the world by sales in 2022, sold 193,700 NEVs in February, jumping 119.37% from a year ago. The giant resumed its triple-digit monthly growth through the year 2022 after it recorded a 62.44% YoY increase in January. Aion, a brand owned by the state-owned manufacturer Guangzhou Automobile Group Co., Ltd. (GAC), maintained leadership among emerging Chinese electric vhicle (EV) startups in February. Its sales surged 253% YoY to 30,086 vehicles with a month-over-month (MoM) increase of 195%, compared with a YoY decrease of more than 36% in January. Other three EV companies each had more than 10,000 vehicles of shipment in February. Li Auto and NIO surged 97.5% and 98.3% YoY respectively. Not all the Chinese EV makers shrugged off weakness. Xpeng Inc failed to turn positive YoY growth. It recorded monthly delivery of 6,010 units with decline of 3.4%, slightly more than 5,219 units it delivered in January.

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