Chinese electric and hybrid vehicles makers are bracing for a downturn, after consumers flocked to showrooms before the government scaled back its subsidy programme designed to promote green vehicles in June. Analysts said anecdotal evidence points to a downturn in the new-energy vehicle (NEV) segment in July, the first full month of sales since the government’s revised subsidies came into effect. “Sales are set to slow in the remaining year because those customers keen on owning a NEV car have already bought,” said Shen Wei, an auto analyst with UBS. “The industry had been overly optimistic about the NEV segment earlier.” New energy vehicles, however, remain a bright spot, having bucked the annual decline in sales weighing on the broader automotive sector, with sales surging 58.7 per cent to 617,000 units in the first six months of the year, according to the China Association of Automobile Manufacturers (CAAM). Last year, China reported sales of 1.26 million pure electric and plug-in hybrid vehicles, up 61.7 per cent from 2017. Shen said that fewer buyers were seen visiting electric car dealerships last month, following a surge in vehicle purchases as consumers rushed to beat the June 26 deadline for the subsidy reduction. Beijing announced in March it would slash subsidies on NEVs by up to 60 per cent as part of a policy to improve technological standards in the green car market. China cuts electric car subsidies by up to 60 per cent as it looks to improve technological standards to global levels Subsidies on NEVs with a driving range of 250-300 kilometres were lowered to 18,000 yuan (US$2,614) from 34,000 yuan. For cars with a range of between 300-400km, the subsidies were been cut by a sharper 60 per cent to 18,000 yuan, from 45,000 yuan earlier. “It was not a surprise that customers made purchases of NEVs ahead of the enforcement of lowered subsidies,” said Tian Maowei, a sales manager at Yiyou Auto Service. He added that sales in the second half of 2019 are “likely to slow” as the subsidy change had forced consumers to bring forward their purchasing decisions. CAAM, a government-backed industry consortium, cut its forecast for NEV sales in 2019 to 1.5 million units from 1.6 million units, in a report issued on July 24. The association based its initial forecast for 27 per cent growth in sales of green vehicles on expectations that consumers would snap up new models with improved performance, in spite of the government’s cut in subsidies. The association last week also downwardly revised its outlook for new vehicle sales nationwide. Its initial expectation for 28 million units, roughly in line with 2018, was revised to 26.68 million units, reflecting a 4.7 per cent decline from 2018. Recent consumer spending data shows that China’s auto market, the world’s largest by unit sales, has matured to the point where growth in new vehicle registrations is cooling. In the first six months of this year, new vehicle sales fell 12 per cent to 12.3 million units. Last year nationwide vehicle sales fell 2.8 per cent, the first contraction since 1992, as consumers tightened their belts amid mounting concern about a slowing economy and the US-China trade war. Although changes in government policy have affected consumer behaviour in the short term, what’s less clear is how much concerns over the economic outlook are weighing on spending. “Since no policy incentives are expected to be implemented any time soon, we predict that the auto market won’t recover until next year,” said Shen. She added that electric and hybrid electric vehicles remain a bright spot for China’s domestic automotive industry.