China's Jan-Feb passenger cars sales down 20% - CPCA

SHANGHAI/BEIJING (Reuters) -China's passenger vehicle sales fell 20% in the first two months of this year, industry data showed on Wednesday, underscoring weak demand in the world's biggest auto market even as some car manufacturers offer reduced prices to revive demand.

Sales in February, 1.42 million units, were 10.4% higher than a year earlier, a low base period when a week-long Lunar New Year holiday reduced business activity, the China Passenger Car Association (CPCA) said.

This year, Lunar New Year holiday fell in January.

Sales of new energy vehicles (NEVs), which include pure battery electric cars and plug-in hybrids, grew faster than the overall market, up 61% in February on a year earlier. Last year the central government extended a tax exemption on such products, while local authorities rolled out incentives to encourage purchases.

NEVs accounted for more than 30% of new car sales.

Domestic electric vehicle (EV) makers have also followed Tesla into what analysts are calling a price war in China at a time when battery costs have started falling.

As a result, EVs have taken market share from best-selling cars with internal combustion engines.

BYD Co Ltd was China's best-selling passenger car brand in February, outselling the Volkswagen brand for the second time in four months, according to retail sales data from China Merchants Bank International.

The Chinese EV giant started offering its Qin plug-in hybrid sedan at prices starting at 99,800 yuan in February, lower than Volkswagen's Lavida and Nissan's Sylphy, which consume more fuel than the Qin.

Tesla accounted for 11.5% of China's battery electric car sales in February, little changed from 11.3% a year before, indicating a waning effect of price cuts it implemented in early January. Its product line is generally older than those of its competitors.

The U.S. automaker exported 40,479 China-made vehicles in February and aims to increase exports and expand into new markets to digest output from its Shanghai factory.

(Reporting by Zhang Yan, Brenda Goh and Beijing newsroom; Editing by Bernadette Baum and Bradley Perrett)