(Yicai) Sept. 10 -- Monthly sales of new energy vehicles in China surpassed the one million mark last month for the first time this year, spurred by government policies encouraging the trade-in of old vehicles for NEVs.

Retail sales of NEVs reached 1.03 million units in August, up 43 percent from a year ago and 17 percent on the prior month, according to data released by the China Passenger Car Association yesterday. But total passenger car sales fell 1.1 percent to 1.92 million, as sales of fuel-powered vehicles plunged 28 percent to about 870,000.

The NEV penetration rate stood at a record 53.9 percent, compared with 37.3 percent a year earlier and above 50 percent for the second straight month. July’s figure was 51.1 percent.

China has been aggressively promoting NEVs as part of the country’s wider efforts to cut carbon emissions and meet environmental goals. The government has introduced a series of subsidies and incentives for buying NEVs, including an uplift in grants in July for the scrapping of older vehicles.

The CPCA noted that with the ongoing implementation of new policies and the introduction of local trade-in programs, prices have started to stabilize, alleviating buyer hesitation.

In the first eight months of the year, almost 6.02 million NEVs were sold, an increase of over 35 percent from the same period of last year.

On July 25, the government increased the existing subsidies to replace old cars with NEVs to CNY20,000 (USD2,747), while those to replace them with fuel cars that meet the National VI B Emission Standard were raised to CNY15,000.

"About 80 percent of consumers are willing to switch to NEVs, especially small electric vehicles and entry-level plug-in hybrid EVs priced around CNY100,000," Cui Dongshu, secretary-general of the CPCA, told Yicai. “Technological advancements in NEVs have improved consumer experience, with prices expected to further decrease.

"The overall NEV market penetration rate will surely exceed 45 percent this year, with a chance of reaching 50 percent,” Cui predicted. "Next year, the figure will certainly surpass 50 percent.”

The CPCA expects local governments to go on rolling out trade-in policies, providing a further boost to NEV sales this month and next.

Editor: Futura Costaglione