Auto dealers' sales pace was disrupted in January due to the impact of the Covid infection wave and the early timing of the Chinese New Year, the CPCA said.

China's new energy passenger vehicle sales are expected to fall sharply in January compared with December, as a wave of Covid infections and the seasonal Chinese New Year holiday weighed on the industry.

The country's retail passenger vehicle sales in January are expected to be 1.36 million units, down 34.6 percent from a year earlier and down 37.3 percent from December, the China Passenger Car Association (CPCA) said today.

Among them, retail sales of new energy passenger vehicles (passenger NEV) are expected to be 360,000 units, up 1.8 percent year-on-year but down 43.8 percent from December, the CPCA said.

That means penetration of passenger NEVs, their share of all passenger car sales, was 26.5 percent in January, down from 29.5 percent in December.

Due to the impact of the Covid infection wave and the early timing of the Chinese New Year, auto dealers' sales pace was disrupted in January and performed weaker than normal seasonal levels, the CPCA said.

The NEV market is facing volatility in the short term, the CPCA said, adding that consumers are in a somewhat wait-and-see mood as some manufacturers have made significant price adjustments.

The latest survey shows that car companies that contribute 80 percent of China's auto sales saw retail sales drop by more than double digits in January compared with the same month last year, according to the CPCA.

Retail sales of China's major automakers were down 24 percent and 18 percent on a daily basis in the first and second weeks of January, respectively.

In the third week of January, the week before the Chinese New Year holiday, average daily retail sales are expected to be on par with the week before last year's Chinese New Year, but down 65 percent from a year ago, the CPCA said.

Given that auto sales typically recover after the holidays and the end-of-month sales pulses from automakers, the Chinese auto market is expected to pick up in the fourth week of January, with retail sales set to be up about 9 percent year-on-year, according to the CPCA.

Notably, the CPCA said the spread of the Covid epidemic has had a diminished impact on consumers' travel and car purchase decisions, and consumer confidence is warming up, with the Chinese auto market expected to return steadily to normalcy.

Local government policies to promote consumption are continuing moderately, and some car companies have introduced subsidy policies, which are expected to support the auto market in the first quarter, according to the CPCA.