China passenger vehicle sales drop 9.5% in November, first fall in six months - data

SHANGHAI, Dec 8 (Reuters) - China's passenger vehicle sales fell for the first time in six months in November and are expected to stay flat next year, an industry body said on Thursday, as demand weakens faster than expected, even as stringent COVID rules are eased.

Vehicle sales fell 9.5% from a year earlier to 1.67 million units in November, a first decline since May, according to China Passenger Car Association (CPCA).

"The November sales were far worse than previous expectation," Cui Dongshu, the CPCA's secretary general, told an online briefing.

"The current trend is unprecedented since the financial crisis in 2008," he said, adding that the significant change in China's COVID policies means that the three-year pandemic is almost over, giving confidence to the auto market.

China has started easing COVID measures after public frustration boiled over late last month, sparking protests against COVID controls that were the biggest demonstration of public discontent since President Xi Jinping came to power in 2012.

The association expected passenger vehicle sales to reach 20.6 million units next year, flat from 2022, a forecast more optimistic than some street views.

Analysts at China Merchants Bank International expect retail passenger vehicle sales in China, the world's biggest car market, to drop 6% next year due to the expiry of a purchase-tax cut.

Even with eased COVID restrictions, the sales outlook remains subdued, as the slowing economy weighs on consumer sentiment and as car makers grapple with a rising unsold vehicle inventory.

U.S. electric vehicle maker Tesla planned to cut December output of its Model Y at its Shanghai plant by more than 20% from the previous month, two people with knowledge of electric vehicle maker's production plan said on Monday.

A Tesla representative called it "false news" without elaborating.

The company, whose Shanghai plant is grappling with elevated inventory levels, is offering a limited time discount of 6,000 yuan ($859) to buyers in China on some models from Wednesday through to the end of 2022, in addition to a previously announced 4,000 yuan insurance subsidy and an up to 9% price cut in October.

Tesla sold 100,291 China-made cars in November, including 37,798 for export, the CPCA said.

Auto industry officials had expected consumers to rush to buy at the end of the year, before government subsidies and the purchase tax cut expire.

But the incentives did little to boost vehicle sales in recent months, as many of the COVID restrictions remained in place last month, dampening demand and slowing production activity. (Reporting by Zhang Yan and Beijing newsroom; Editing by Toby Chopra)