Posted on 13 Feb 2026

China's automotive market slowed down in the first month of 2026, with sales slipping by 3.2% on year to reach 2.35 million units, while auto output rose by a minimal 0.01% from January last year to 2.45 million units, according to the latest release by China Association of Automobile Manufacturers (CAAM) published on February 11.

The slow start to the year reflected a confluence of factors, according to CAAM, chief among them being the introduction of a half-rate levy on purchases of new energy vehicles (NEVs), as the standard 10% purchase tax shifted from full exemption to a reduced 5% rate from January 1, 2026.

Meanwhile, strong sales momentum in the final month of 2025 – driven by consumers rushing to place orders ahead of the expiry of the NEV tax exemption on December 31 – led to a front-loading of demand. As a result, domestic sales last month contracted sharply from December levels.

According to the CAAM, among the 2.35 million units vehicles sold in January, domestic sales totaled 1.67 million units, down by 14.8% on year and 33.9% on month.

However, vehicle exports remained a strong pillar supporting the auto industry, CAAM said, with auto exports amounting to 681,000 units in January, higher by a large 44.9% on year.

The passenger car segment witnessed a modest decline in sales and output in January, with passenger vehicle sales reaching 1.99 million units, lower by 6.8% on year, while output dropped by 4.1% on year to total 2.06 million units.

Sales and output of commercial vehicles sustained upward momentum last month, jumping by 23.5% and 29.9% on year to 359,000 units and 388,000 units respectively in January.

The NEV segment remained largely stable however, with its sales gaining by a minimal 0.1% on year to 945,000 units last month, while output rose by 2.5% on year to 1.04 million units, according to CAAM.

Within the NEV category, electric vehicles saw their sales and output increase by 4% and 3.8% on year to 597,000 and 659,000 units. Sales of plug-in hybrid vehicles slid by 5.9% to 348,000 units, however, while output edged up by 0.5% to 382,000 units in January.

Despite near-term pressure on sales, this does not signal a turning point for industry growth, according to Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA). Rather, it reflects a combination of short-term factors, he told local media recently.

According to Cui, the current market adjustment is "a natural phase" in the industry's transition from "policy-driven" to "market-driven" growth. With details relating to how new car buyers can secure subsidies from local governments expected to be finalized this month, and domestic demand seen picking up after the Chinese New Year holiday, the automotive market is set to quickly return to a steady growth trajectory, he argued.

Source:Mysteel Global

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