China’s car market, the largest in the world, is entering a decisive phase. After years of rapid expansion, growth is slowing sharply, and industry leaders now warn that sales may barely grow - or not grow at all - in 2026. Signals coming from manufacturers, dealers, and industry associations suggest the sector is approaching a structural turning point rather than a temporary pause, DKNews.kz reports.
Growth Slows to a Three-Year Low
According to data from the China Passenger Car Association (CPCA), vehicle sales in China rose by 3.9% in 2025, down from 5.3% in 2024. While the market is still expanding, this marked the slowest growth rate in three years, highlighting a clear loss of momentum.
At the same time, a symbolic milestone was reached. Electric vehicles and plug-in hybrids outsold gasoline-powered cars for the first time over a full year. Yet even this landmark failed to mask the broader slowdown taking place across the industry.
Electric Vehicles Are No Longer Growing at Breakneck Speed
The once-explosive growth of new-energy vehicles is fading. Sales of EVs and plug-in hybrids rose 17.6% in 2025, a sharp deceleration from the 40.7% surge recorded a year earlier.
Looking ahead, CPCA estimates that combined sales of fully electric cars and plug-in hybrids may grow by only around 10% in 2026. For a sector long accustomed to double- and triple-digit expansion, this marks a shift toward maturity - and intensifying competition.
Exports Remain a Bright Spot - For Now
With domestic demand losing steam, exports have become one of the few remaining growth engines for China’s auto industry.
In 2025, vehicle exports increased 19.4% to 5.79 million units. Exports of fully electric vehicles jumped even faster, rising 48.8% to 1.52 million units.
However, industry officials caution that such rapid export growth is unlikely to be sustainable. Trade barriers, anti-subsidy investigations, and growing resistance from overseas markets could limit China’s ability to rely on exports as a long-term solution.
BYD Slows at Home but Sets Records Abroad
China’s flagship automaker BYD offers a clear illustration of the industry’s shifting dynamics. In 2025, the company posted its slowest sales growth in five years, reflecting pressure in the domestic market.
Yet overseas demand surged. BYD’s international sales exceeded 1 million vehicles for the first time, while total sales of new-energy vehicles reached about 4.6 million units, including roughly 2.26 million battery-electric cars.
For comparison, Tesla delivered around 1.63 million electric vehicles globally during the year, underscoring how closely matched the global EV leaders have become.
Dealers Brace for a Tougher 2026
Sentiment on the ground is turning cautious. A survey conducted by the China Automobile Dealers Association found that 41% of dealers expect automakers to lower sales targets in 2026.
More concerning, 18.1% of respondents anticipate sales declines of more than 10%, suggesting that pressure is building not only at the manufacturing level but across the entire distribution chain.
From Volume Growth to Survival Mode
The broader picture points to a fundamental shift. China’s auto industry is gradually moving away from an era defined by rapid volume growth toward one shaped by price competition, margin pressure, and consolidation.
As government subsidies fade, consumer confidence remains fragile, and global markets push back against Chinese exports, automakers may be forced to rethink strategies built around scale alone. Profitability, brand differentiation, and overseas localization are becoming just as important as production capacity.
What 2026 May Bring
For China’s auto industry, 2026 could mark the end of easy growth. The market is not collapsing, but it is clearly cooling. Companies that relied on aggressive expansion may struggle, while those able to adapt to slower growth and tougher competition could emerge stronger.
For global markets, the shift matters. China’s auto sector no longer looks like an unstoppable growth machine - and how it navigates this transition may shape the future of the global automotive industry.
