China’s Car Sales Climb 15% in April as NEVs Surge Despite Export and Safety Setbacks

China’s car market experienced a significant boost in April, with passenger vehicle sales rising 14.8% year-on-year, marking the third consecutive month of growth. According to the China Passenger Car Association (CPCA), sales reached 1.78 million units in April alone. Over the first four months of 2025, total car sales climbed 8.2% to 6.97 million units, indicating steady momentum despite global economic pressures.

NEV Surge Driven by Government Subsidies Amid Trade Tensions and Tariff Pressures

A major contributor to this growth was the surge in sales of new energy vehicles (NEVs), which include electric and plug-in hybrid cars. NEV sales soared by 33.9% compared to the previous year and accounted for over half of all passenger vehicle sales in April. Government incentives, especially those favoring NEV trade-ins over gasoline-powered vehicles, played a key role in boosting consumer adoption.

To support domestic consumption amid rising U.S.-China trade tensions, the Chinese government implemented a robust subsidy program encouraging auto trade-ins. As of April 24, 2.71 million vehicles had benefited from these subsidies. The program, which provides greater financial support for upgrading to NEVs, helped maintain consumer confidence despite the negative impact of increased U.S. tariffs on Chinese car exports.

Export Struggles and Safety Concerns Cool Momentum in China’s High-Tech Auto Sector

While domestic sales showed strength, China’s auto exports faced headwinds. Car exports dropped by 2.2% in April, following an 8% decline in March. This downturn reflects the broader challenges posed by international trade frictions, particularly with the United States, which have disrupted China’s export-driven segments of the automotive industry.

The appeal of automated driving systems, once a strong selling point in China’s competitive car market, appears to be fading. This shift follows a government crackdown on the marketing of “autonomous” or “smart” driving technologies after a fatal accident involving Xiaomi’s SU7 EV. The incident, in which the vehicle caught fire after a collision during a handover from assisted driving to manual control, has tempered consumer and manufacturer enthusiasm for such features.