Retail sales of passenger cars in China slipped in November as lockdowns due to the country’s still-strict approach to COVID kept buyers away from showrooms.

Sales totaled 1.67 million units in November, down 9.5% from the same period of 2021 and a 10.5% drop from October, data from China’s Passenger Car Association released December 8 showed.
Sales of new-energy vehicles (NEVs), which include pure battery electric cars and hybrids, rose 58.2% year-on-year to 598,000 units, led by local giant BYD Co. and U.S. pioneer Tesla Inc. NEV deliveries to car dealerships may now touch 8.4 million in 2023 in what is the world’s biggest automobile market, PCA said.

“We’re still optimistic about NEV sales in 2023, with an increase of at least 30%,” Cui Dongshu, secretary general of the PCA, said. Deliveries this year should total around 6.5 million, he added.

BYD, backed by Warren Buffett, shipped 230,427 units in the month while Tesla delivered a record 100,291 EVs. Some 62,493 of the locally built Model 3 sedans and Model Y sports utility vehicles were sold to the domestic market, leaving 37,798 for export, according to PCA.

China’s automotive industry, like most others, has been hampered by the country’s COVID Zero approach, which officials only recently started stepping away from. For much of the past almost three years, authorities have been locking down swathes of the country, forcing people into COVID quarantine camps and subjecting large portions of the population to mass testing.

That’s disrupted economic growth and dented consumer confidence. Companies including Volkswagen AG and Honda Motor Co. have been forced to suspend production as employees were stuck at home and components couldn’t reach the factories. Supply chain snarls have also hit almost every firm.

Guangzhou-based Xpeng Inc., for example, only delivered 5,811 vehicles in November and 5,101 units in October. Another Chinese EV maker Li Auto Inc. said publicly that two of its models had been delayed due to a lack of “essential components.”

“COVID outbreaks and lockdowns in major automotive consumption regions, including Guangdong, Chongqing and Henan, have hit both the supply and consumer ends, leading to an abnormal consecutive month-over-month decline in this fall and winter,” Cui said.

Car sales are however expected to pick up in December ahead of state subsidies for cleaner vehicles and tax cuts for low-emission gasoline cars falling away. NEV deliveries to car dealerships for the first 11 months of the year were 5.74 million.

Wholesales of gasoline automobiles in 2023 are expected to drop by 10% to 15.1 million units, PCA said.