Visitors experience an AITO M9 SUV on display during the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) Auto Show 2026 in Shenzhen, South China’s Guangdong province, on May 29, 2026. [Photo/Xinhua]
China’s top car industry associations expect market conditions to improve in the second half, as policy support, rising exports and the rapid growth of new energy vehicles provide fresh momentum.
China produced 14.99 million vehicles and sold 15.02 million vehicles in the first six months of 2026, down 4 percent and 4.1 percent year-on-year, respectively, said the China Association of Automobile Manufacturers.
Domestic sales slumped 21.1 percent year-on-year to 9.92 million units. Of them, traditional gasoline vehicles totaled 4.83 million units, down 27.8 percent year-on-year.
Chen Shihua, deputy secretary-general of the CAAM, said the market is undergoing structural changes. He explained that while domestic demand remains under pressure, strong export growth has provided support.
China exported 1.03 million vehicles in June, marking the first time monthly exports surpassed the 1 million-unit level. Total exports are expected to exceed 10 million units this year, said the CAAM.
The association expects the market to gain momentum in the second half. Chen said continued implementation of consumer incentive policies, along with new vehicle offerings and more stable market pricing, will help support auto consumption and improve industry performance.
However, CAAM also warned that challenges remain, including weak domestic demand, a complex external environment and intensifying market competition.
The second half will therefore be a key period for automakers as they compete through new products, electrification strategies and overseas expansion, while the industry moves toward a more balanced recovery.
Cui Dongshu, secretary-general of the China Passenger Car Association, expressed a relatively optimistic outlook as well.
He said wholesale sales are expected to remain at high levels, while strong export momentum is unlikely to weaken significantly in the near term, with automakers maintaining a strong willingness to increase deliveries.
He added that multiple positive factors — including supportive policies, lower fuel prices, the implementation of new national battery safety standards and updated vehicle and vessel tax regulations — will gradually take effect, helping drive a recovery in retail sales in the third and fourth quarters.
There have been signs of slow recovery. Declines narrowed in June compared with the first five months, indicating a gradual stabilization of the market.
“China’s auto industry maintained overall stable operations in the first half of the year, with cumulative declines in production and sales narrowing month by month,” Chen said.
In June, auto production and sales reached 2.76 million and 2.81 million units, respectively.
While sales declined 3.2 percent from 2025, they increased 6.9 percent month-on-month, suggesting improving momentum toward the middle of 2026.
New energy vehicles continued to drive industry growth. NEV production and sales reached 1.59 million and 1.64 million units in June, up 26 percent and 23.6 percent year-on-year, respectively. NEVs accounted for 58.5 percent of total new vehicle sales during the month.
For the first half of 2026, NEV production and sales totaled 7.43 million and 7.44 million units, representing year-on-year growth of 6.7 percent and 7.3 percent.
NEVs accounted for nearly half of all new vehicle sales, with a penetration rate of 49.6 percent.
At the same time, traditional internal combustion engine vehicles continue to decline as consumers choose electrified models.
The passenger vehicle segment remained a major challenge. Domestic passenger vehicle sales reached 8.28 million units in the first half, down 24.3 percent year-on-year. Traditional fuel-powered passenger vehicle sales dropped 31.9 percent during the same period.
Global volume car brands, in particular, continued to experience difficulties as Chinese brands gained market share in electrification and intelligent vehicle technologies.
According to the CPCA, mainstream joint venture brands sold 330,000 vehicles in June, down 34 percent year-on-year but up 8 percent from May.
Among Japanese automakers, Dongfeng Honda reported June sales of 19,094 units, marking three consecutive months of growth. GAC Honda sold 14,099 units in June, although sales remained significantly lower than a year earlier.
Tanks to chinadaily.com.cn
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