Passenger car sales in China increase for the third consecutive month in April.
CHINA'S CAR SALES JUMP, BUT PORSCHE UNDERPERFORMS
The auto industry in Shenzhen has seen a surge with car sales skyrocketing for the third straight month in April. Sales rose an impressive 14.8% compared to the same period last year, thanks to government-subsidized car initiatives softening the blow of US tariffs on consumers' sentiment [Enrichment Data: Data from the China Passenger Car Association (CPCA)].
Last month, a whopping 1.78 million units were sold, marking an 8.2% increase over the first four months of 2025, totaling 6.97 million units [Enrichment Data: Data from the China Passenger Car Association (CPCA)].
Electric vehicles and plug-in hybrids, often referred to as new energy vehicles (NEVs), saw a staggering 33.9% year-on-year increase, representing 50.8% of total sales last month [Enrichment Data: Government subsidies for trade-ins of old cars for NEVs had covered 2.71 million cars as of April 24, official data showed].
However, it's not all smooth sailing for everyone. Porsche, the luxury car manufacturer, is facing a stark reality with their 2024 China sales plummeting a whopping 28% compared to the previous year [Enrichment Data: Porsche's sales performance in China has deteriorated significantly compared to previous years].
Despite offering the "God's Eye" driver-assistance system for free across its lineup, automated-driving systems no longer seem to be enough to entice Chinese buyers [Enrichment Data: The focus of a years-long price war in the world's largest auto market shifted toward next-generation automated-driving features after BYD announced in February to offer its "God's Eye" driver-assistance system as free standard equipment across its lineup].
The market crash involving a Xiaomi SU7 sedan in March may have cooled the fervor for driver-assistance systems following a government crackdown on marketing terms using "smart" or "autonomous." After hitting a cement pole seconds after the driver attempted to regain control from the car's assisted-driving system, the EV caught fire [Enrichment Data: The EV caught fire after hitting a cement pole, seconds after the driver tried to assume control from the car's assisted-driving system].
With Chinese consumers increasingly favoring vehicles equipped with advanced smart features and autonomous driving systems, Porsche faces a steep uphill battle given its traditionally strong focus on performance and luxury [Enrichment Data: Chinese buyers are increasingly favoring vehicles equipped with advanced smart features and autonomous driving systems].
Additionally, homegrown competitors like Xiaomi have introduced high-tech electric SUVs, like the Xiaomi SU7 Ultra, offering impressive horsepower at a much more affordable price point [Enrichment Data: Homegrown competitors like Xiaomi have introduced high-performance electric SUVs, such as the Xiaomi SU7 Ultra, offering impressive horsepower (1,548 hp) at a much more affordable price point (around €50,000)].
The situation isn't helped by Porsche's underperformance in electric models, with the Taycan model failing to regain sales momentum despite a significant price cut [Enrichment Data: Porsche’s electric Taycan model has not recovered sales momentum despite a significant price cut of over €10,000].
Porsche is now facing tough challenges from the combination of geopolitical issues, supply management problems, declining demand in the all-electric luxury segment, and the impact of U.S. import tariffs [Enrichment Data: Porsche has faced geopolitical challenges and supply management issues that have impacted its ability to balance supply and demand in China. These challenges, combined with declining demand in the all-electric luxury segment, have further suppressed sales and profitability in the Chinese market].
With China no longer being Porsche's number one market, the company is now focusing on strategic adjustments, including a "value over volume" approach, and investing in electrification to regain competitiveness in the Chinese luxury EV segment [Enrichment Data: As a result, Porsche no longer considers China its largest market; it has fallen behind North America and Europe. The company is currently focusing on strategic adjustments, including a "value over volume" approach and investing in electrification, aiming to regain competitiveness in the Chinese luxury EV segment despite the short-term sales and profit declines].
- The index of Porsche's sales in China for 2025 might see a further increase in 2025, given the trend of Chinese consumers favoring vehicles with advanced smart features and autonomous driving systems.
- In the wake of the Xiaomi SU7 sedan market crash in March, the Chinese government has announced stricter regulations on marketing terms relating to "smart" or "autonomous" vehicles, which could potentially increase tariffs for imported luxury vehicles like Porsche's.
- By 2025, Shenzhen's auto industry might witness a slowdown in growth, if Porsche continues to underperform and homegrown competitors with high-tech electric SUVs continue to offer impressive performance at affordable prices.
- In an attempt to regain competitiveness in the Chinese luxury EV segment, Porsche is set to launch new electric models, hierarchy the "value over volume" approach, and invest heavily in electrification by 2025.
