Large drop in sales of combustion engine cars in China affecting German car industry

Falling sales of combustion engine cars in China, the world’s largest market for passenger cars, is having a negative impact on the German car industry, reports Handelsblatt. Data by automotive market specialist Marklines on the registration of new vehicles shows that back in 2020, 94 percent of new cars in China were powered by conventional fuels like petrol or diesel, but by the first half of 2024, that figure had dropped significantly to 59 percent. Electric cars, on the other hand, have experienced a recent boost in sales. According to the Chinese Passenger Car Association (CPCA), more electric cars and plug-in hybrids were delivered than pure diesel and petrol engines for the first time in July of this year. Chinese manufacturers have the upper hand on this technology, writes Handelsblatt. Domestic manufacturers like BYD or Geely have increased their joint market share for new cars to 52 percent (from 33% in 2020).

As the combustion engine market shrinks in China, mass manufacturers like Volkswagen (VW) are suffering the consequences, writes Handelsblatt. The market share of the Volkswagen Group in China has dropped from 19 to 14 percent within four and half years. China has tax breaks and purchase bonuses for electric vehicles, and getting a licence plate, for which there are long waiting lists, is easier with an electric vehicle (EV).

Private demand for purely battery-electric vehicles in Germany dropped by 47 percent in the first six months of the year compared to the same time period in 2023. Recent calculations show that the slump in new electric vehicle registrations means the country is five years behind its target of having 15 million EVs on its roads by 2030. Still, Germany is the largest producer of electric vehicles in Europe, and comes only second to China globally. Think tank Agora Verkehrswende called for more cooperation with Chinese manufacturers to help reach the German target.