China's car sales shrink 2.9% in June as big-ticket spending falters

China's passenger vehicle sales fell in June, data from the China Passenger Car Association (CPCA) showed on Monday, as a stumbling economic recovery led to more consumer caution on big-ticket spending.

Car sales in June totalled 1.91 million units, down 2.9% from last year, CPCA data showed. It was the first monthly contraction since January. However, sales advanced 2.5% to 9.65 million units in the first half of the year.

Meanwhile, sales of new energy vehicles (NEVs), including pure battery electric cars and plug-in hybrids, jumped more than 25% in June, accounting for roughly 35% of the total car sales. NEV sales surged more than 37% to 3.09 million units in the first six months.

Both Tesla TSLA.O and rival BYD 002594.SZ made record deliveries of their China-made vehicles in the second quarter, despite an uncertain recovery for the sector.

Chinese automakers counted more on overseas markets to sustain their sales growth, with car exports soaring 56% in June.

However, Tesla's share in China's market of pure electric and plug-in hybrid cars fell to 8.8% in the second quarter from 10.5% in the first three months, according to a Reuters calculation based on CPCA numbers.

With domestic consumer demand weak, the world's largest auto market has been grappling with a price war triggered by Tesla in January that has since spread to more than 40 brands offering discounts on their vehicles.

While the price cuts initially boosted sales, the market's recovery has been losing steam, prompting authorities to roll out more buyer incentives, including purchase tax breaks for EVs.

Two days after organising an industry-wide pledge to avoid "abnormal pricing", the China Association of Automobile Manufacturers (CAAM) retracted on Saturday, citing antitrust law.

The joint pledge by 16 automakers, including Tesla, BYD, Nio, Li Auto and Xpeng had been interpreted by some as signalling a truce in a price war that crippled industry earnings.