China's retail sales of new energy vehicles (NEVs) are expected to total about 1.07 million in October, with penetration holding at an elevated 66.9% amid continued pressure on the broader auto market.

The China Passenger Car Association (CPCA) released the forecast in a report on Friday, saying the boost from traditional seasonal factors had weakened significantly.

The forecast indicates that October NEV retail sales will decline by 16.5% year-on-year and by about 1.3% compared to September. The penetration rate is expected to fall by 0.1 percentage points from September's record high of 67.0%.

The CPCA expects overall passenger car retail sales to total about 1.6 million in October, down 1.1% from September and 28.9% year-on-year, deepening the annual decline from September's 28.0%.

The forecast suggests China's auto market still lacks momentum for a meaningful recovery in October following a weak September, with high NEV penetration failing to reverse sluggish overall demand.

Showroom traffic rose modestly during the National Day holiday in early October but quickly fell back afterward, the CPCA said. Weak household income expectations and a wait-and-see attitude fueled by competition among dealers have shown no fundamental improvement.

A survey of automakers in early October showed most leading manufacturers remained cautious about the pace of fourth-quarter sales, the CPCA said. Most automakers had achieved less than 60% of their annual sales targets in the first 3 quarters.

Despite pressure to boost fourth-quarter volumes, efforts to curb excessive competition and pressure on dealer profitability have limited room for price cuts to drive sales, prompting generally cautious inventory strategies in October.

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