Auto sales sink in China as phase out of subsidies for trade-ins hits demand

HONG KONG (AP) — China’s domestic passenger car sales fell 34.2% in February from a year earlier, an industry association said Wednesday, reflecting weakening demand as some trade-in subsidies are phased out.

Only 950,000 units of passenger cars were sold in China last month, according to the China Association of Automobile Manufacturers, down from nearly 1.4 million vehicles sold in January.

Overall passenger car sales including exports dropped 15.4% year-on-year, even as shipments overseas jumped 58% to 586,000, highlighting the challenges for Chinese carmakers trying to offset sluggish domestic sales by expanding into foreign markets.

Automakers have been struggling with weak demand as the government has been phasing out trade-in subsidies to encourage purchases of electric vehicles. Chinese consumers have also been steering clear of big purchases, feeling a pinch from a slowing economy and protracted property slump.

The Lunar New Year festival, China’s biggest holiday, took place in February, which also likely hurt sales.