Wholesale new-vehicle deliveries dropped 7.9 percent to 2.33 million industrywide in November, ending a five-month recovery, the China Association of Automobile Manufacturers said Friday.
The trade group blamed the market contraction on a slowing economy and a flare-up in coronavirus outbreaks across the country.
Last month, wholesale deliveries of new light vehicles -- sedans, crossovers, SUVs, multi-purpose vehicles and minibuses -- dipped 5.6 percent to 2.08 million. Demand for new commercial vehicles such as buses and trucks fell 23 percent to around 253,000.
Through November, new-vehicle shipments industrywide gained 3.3 percent from a year earlier to 24.3 million. Light-vehicle sales rose 12 percent to exceed 21.3 million while commercial-vehicle demand fell 32 percent to roughly 3 million.
Demand for new electrified vehicles remained robust in November, jumping 72 percent to approach 786,000. Shipments of full electric vehicles rallied 67 percent to some 615,000 while sales of plug-in hybrids surged 93 percent to roughly 171,000 during the month.
In the first 11 months, electrified-vehicle sales industrywide doubled to top 6.06 million. Automakers shipped some 4.73 million EVs and 1.33 million plug-in hybrids, spiking 89 percent and 155 percent, respectively, during the 11-month period.
China's auto sales are likely to rise 3 percent to around 27.6 million in 2023, CAAM said, expecting economic recovery to offset such negatives as rising COVID-19 infections.
Sales of new-energy vehicles are likely to grow 35 percent to 9 million next year, Xu Haidong, deputy chief engineer at the association, said in an online briefing on Friday.
The association sees several downward pressures on the sector next year, including a slower recovery in consumer confidence and a slump that could be expected to follow the government incentives expiring at the end of 2022.
It called for an extension until at least 2023 for the incentives - a cut in sales taxes on combustion-engine vehicles and various local-government subsidies.
The China Passenger Car Association made the same request on Thursday.
Automakers and investors are bracing for a downturn in the market as the economy sags, but CAAM said it expected increased government support would sustain economic recovery next year.
Beijing started easing pandemic controls this week after public frustration boiled over into protests at the end of November. Large-scale COVID infections would have an "adverse influence" on the auto market next year, CAAM said.
Sources at two Western carmakers with factories in China told Reuters on Friday they were monitoring the situation on the ground carefully.
One was worried the virus would spread quickly as restrictions ease, increasing the likelihood of staff sickness and potentially hurting output.
Another said the situation was "unpredictable", with the relief this week at reopening potentially turning out to be shortlived.
Reuters contributed to this report.