China Passenger-Vehicle Sales Fell 20 Percent in First Half While Exports Surged

China's passenger-vehicle sales fell 20.2 percent in the first half of 2026, the China Passenger Car Association reported. Cumulative deliveries reached 8.7 million units through June. The association lowered its full-year retail-sales forecast to a 14 percent decline from an earlier projection of flat year-on-year sales, citing 20.4 million units expected by year-end compared with 23.7 million in 2025.

Transportation energy costs rose 15.3 percent year-over-year in June, according to China's National Bureau of Statistics. Retail sales of internal-combustion-engine vehicles dropped 39 percent in the month, with pure gasoline models down 42 percent. Those vehicles accounted for 78 percent of the total passenger-vehicle sales decline in June.

Passenger-vehicle prices fell more than 1 percent year-over-year. Industry-wide profit margins averaged 3.4 percent for the January-May period, while industry profits fell 20 percent year-on-year, CPCA Secretary General Cui Dongshu said. Battery-related input costs including lithium and memory chips rose sharply.

Beijing reduced new-energy-vehicle subsidies in 2026. Volkswagen Group reported a 25.9 percent year-on-year drop in deliveries in China for the first half, totaling 973,000 units. BYD recorded 1.8 million sales, Geely 1.4 million and Leapmotor 356,000.

Toyota posted 579,000 deliveries from January through May. Chinese passenger-vehicle exports reached 877,000 units in June, up 11.5 percent month-on-month and 82.3 percent year-on-year. Xiao Feng, head of Hong Kong/China Industrials Research at Citic CLSA, projects a 20 percent full-year sales decline and a 5 to 6 percent drop in new-energy-vehicle sales.

He expects the downturn to give way to a rebound in 2027 as vehicle fleets age and owners replace units.