China's passenger car sales surged 26.1% year on year to 1.4 million units in February after a 12% slump in January, driven by government subsidies and pent-up demand from the Lunar New Year break, Reuters reported Monday.

Gasoline cars outsold electric vehicles and plug-in hybrids for the third straight month, despite new energy vehicle sales growing 80% and making up 49% of total sales, according to the report.

The BYD (SHE:002594)-led price war is intensifying, with automakers racing to add smart features at no extra cost, Reuters wrote. Following suit were rivals Geely, Stellantis-backed Leapmotor (HKG:9863), and Toyota (TYO:7203).

Meanwhile, smartphone vendor Xiaomi (HKG:1810) sold 23,728 vehicles in February, outselling Tesla's sales of 26,777 units, which slumped to their lowest since November 2022, according to the report.

Overall car exports rose 11% in February, faster than the 3% gain in January, Reuters wrote.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)