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Electric cars in China

China new-energy vehicle sales see first decline in two years

Beijing's subsidy cuts triggered the 4.7% fall, says auto industry

A charging station is seen at Shanghai auto show in Shanghai, China on April 17, 2019.   © Reuters

BEIJING (Reuters) -- Sales of new energy vehicles (NEVs) in China fell 4.7% in July from a year earlier, the first drop in more that two years, data from the country's biggest auto industry association showed.

NEV sales fell to 80,000 units last month in China. That compared with a growth of 80% in NEV sales in June.

Overall auto sales in the world's biggest vehicle market fell 4.3% in July, down for a 13th consecutive month, the China Association of Automobile Manufacturers (CAAM) said on Monday.

That followed declines of 9.6% in June and 16.4% in May, as well as the first annual contraction last year since the 1990s against a backdrop of slowing economic growth and a crippling trade war with the United States.

"The main reason for new energy vehicle sales decline in July is the switch of policies," said Chen Shihua, assistant secretary general at the CAAM, referring to China's move to cut NEV subsidies last month.

CAAM has previously said it expects China auto sales to drop 5% year-on-year to 26.68 million vehicles this year. It had trimmed its forecast for a rise in NEV sales to 1.5 million, versus a previous forecast of 1.6 million.

The prolonged sales decline has made local carmakers from Geely to Great Wall cut expectation on sales and profit.

It has also prompted some global names like Peugeot maker PSA Group to close plant and adjust workforce.

China has since January been trying to boost consumption of wide-ranging goods as the world's No.2 economy slows further in 2019 amid the trade spat with the United States.

But its measures to spur car sales have disappointed as they included no plans to relax controls over the issuance of new licences for traditional-fuel cars in major cities.

The implementation of NEV emission standards earlier than the central government's 2020 deadline by 15 cities and provinces, which account for over 60% of car sales in China, have spooked buyers too and hurt sales, according to CAAM, analysts, dealers and consumers.

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