China's car market heads for worst year since 2021 as sales plunge 20%
China's passenger car market is on track for its worst performance since 2021, with first-half 2026 sales dropping 20.2% year-on-year. The China Passenger Car Association (CPCA) revised its full-year forecast to a 14% decline, projecting 20.4 million units sold, down from a record 23.7 million in 2025. Soaring fuel costs (up 15.3% in June) and Beijing's pullback of new energy vehicle (NEV) subsidies have stifled demand. Internal combustion engine vehicle sales fell 39% in June, while NEV sales are expected to decline 5-6%. Rising raw material and component costs have squeezed profit margins to 3.4%, with industry profits down 20%. Analysts expect a market shakeout, consolidating China's fragmented EV market to 7-8 major players by 2030, with American automakers unlikely to survive. Recovery is anticipated in 2027, driven by export growth.
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China's car market heads for worst year since 2021 as sales plunge 20%
China's passenger car market is on track for its worst performance since 2021, with first-half 2026 sales dropping 20.2% year-on-year. The China Passenger Car Association (CPCA) revised its full-year forecast to a 14% decline, projecting 20.4 million units sold, down from a record 23.7 million in 2025. Soaring fuel costs (up 15.3% in June) and Beijing's pullback of new energy vehicle (NEV) subsidies have stifled demand. Internal combustion engine vehicle sales fell 39% in June, while NEV sales are expected to decline 5-6%. Rising raw material and component costs have squeezed profit margins to 3.4%, with industry profits down 20%. Analysts expect a market shakeout, consolidating China's fragmented EV market to 7-8 major players by 2030, with American automakers unlikely to survive. Recovery is anticipated in 2027, driven by export growth.