Foreign carmakers offer steep discounts on petrol-powered cars in cutthroat Chinese market

Foreign carmakers have been slashing the prices of petrol-powered cars they make in China by more than 20 per cent to survive in a cutthroat market amid weakening consumer demand.

Last month, big international marques including Volkswagen and Toyota offered average discounts of 23.4 per cent on cars powered by internal combustion engines, according to data from the China Passenger Car Association (CPCA). That compared with an average discount of 23.7 per cent in July.

“Because their new cars were priced at a particularly low level, the strong promotional efforts have persisted over the past months, which resulted in a small sales increase,” the association said in a report released this week.

It said that, in comparison, the average discount in 2023 was about 13 per cent.

The accelerating electrification seen on mainland China’s roads over the past decade has eaten into international car brands’ market share in the world’s largest automotive market due to their slow transition to electric vehicles (EVs), according to analysts.

They said the global energy shock arising from the Iran war had exacerbated the foreign carmakers’ bleak sales outlook as more budget-conscious consumers opted for battery-powered vehicles to save fuel costs.

Last month, EVs’ share of vehicle sales on the mainland hit an all-time high of 65.2 per cent, according to CPCA data. However, overall car sales slumped 23.6 per cent year on year.