Passenger vehicle sales plunged nearly 40% in China in January after expiration of a tax cut on internal combustion engine models and subsidies on electric vehicles, conditions exacerbated by the Lunar New Year.

Vehicle sales typically surge before the holiday, which usually falls in February, and wane during it.

The central government also chose not to extend beyond December its 50% tax cut on ICE models, and it ended its nationwide EV purchase subsidy.

The 38% decrease in sales to 1.3 million units followed a 2.4% gain in December, according to the China Passenger Car Association.

Sales in the biggest vehicle market in the world also declined for alternative-energy models, such as plug-in hybrids and electric vehicles, falling 6.3% year-over-year to 332,000 units after seeing a whopping 90% growth spurt last year.