China’s auto market came under renewed pressure in April, with passenger vehicle sales falling 21.5% to 1.4 million units, the lowest April level since 2022, when Covid lockdowns weighed on demand. The weakness was led by gasoline-powered vehicles, where deliveries dropped by a third after the Iran oil shock pushed fuel-price concerns deeper into consumer decisions. The electric-vehicle market was not strong enough to absorb the blow, with new energy vehicle sales, including EVs and plug-in hybrids, falling 6.8%, according to data from the China Passenger Car Association. Cui Dongshu, the PCA’s general secretary, said the decline in gasoline car sales was relatively severe and had exceeded expectations, adding that higher oil prices had a serious impact on the market.
The April decline could carry broader implications for investors watching China’s consumer economy, because cars remain one of the largest household purchases after real estate. The industry had been looking for a recovery from April, but sales in the first four months of the year contracted 18.5%, extending the pressure on a sector closely tied to household confidence. Li Yanwei, an advisor to the China Automobile Dealers Association, pointed to two main forces behind the sudden pullback: a slowing economy that has led to job losses and falling wages, and the surge in oil prices, which has weighed on the stock market and sentiment. Auto-related purchases fell to 7.8% of China’s retail consumption in the first quarter, the lowest level in at least five years, after fluctuating between 9.8% and 10.4% from 2022 to 2025. Li said a return above 9% would suggest the first-quarter slump was seasonal, while a full-year reading below 8% would raise the possibility that auto consumption could be entering a deeper structural downturn.
For EV makers, the picture is becoming more complicated. The sharp drop in gasoline vehicle demand lifted the penetration rate of EVs and plug-in hybrids to more than 60% of new car sales, the highest monthly figure recorded for mainland China, even though overall new energy vehicle sales declined. BYD (BYDDF) posted its eighth straight monthly year-on-year decline in total sales, falling 16% in April, although overseas sales surged 71%. Tesla 
TSLA shipped 79,478 EVs from its Shanghai plant, including 25,956 sold in China, representing a 10% decline from a year earlier, while exports jumped 80% as the Shanghai factory served markets such as Southeast Asia, which has been hit hard by the oil crisis. Overall exports of new energy vehicles rose 112%, driven by stronger overseas shipments of EVs and plug-in hybrids. Morgan Stanley analysts including Tim Hsiao wrote in a May 4 note that EV companies such as Nio 
NIO and Xpeng 
XPEV are expected to turn loss-making again in the first quarter after making a profit in the fourth quarter of last year, with second-quarter operational resurgence under strict scrutiny and tied to holiday traffic, order flow and major launches.