China's Auto Market Enters the Era of "Quality Over Quantity" in 2026: Slower Growth, Diversified Tech, and Domestic Brands in the Lead

By 2026, China’s auto market will bid farewell to high-speed growth and enter a phase of mild negative growth, with passenger vehicle sales expected to decline by approximately 3.3% year-over-year. As policy-driven tailwinds fade, the market will revert to being driven by organic demand, with consumers placing greater emphasis on genuine product value and total cost of ownership—over half of potential buyers now inclined to postpone purchases. Price wars will become unsustainable, prompting the industry to shift from competing on price alone to competing on value. Companies lacking cost-control capabilities and technological premium pricing power will face elimination. New energy vehicle (NEV) penetration is projected to reach 56%, with battery electric vehicles (BEVs) and plug-in hybrid/electric-extended vehicles (PHEVs/EREVs) developing in parallel, establishing a stable market structure characterized by “BEV dominance alongside coexistence of hybrids.” Domestic brands are poised to capture over 72% of the market share, led by players like BYD and Geely, which leverage full-stack in-house R&D and multi-technology pathways. Meanwhile, new-energy startups will differentiate themselves through elevated intelligent driving experiences. At the same time, Chinese automakers must evolve their overseas strategies from Export 1.0 to localized Operation 2.0 to navigate rising global trade barriers. The year 2026 will mark a pivotal “coming-of-age” moment for China’s automotive industry as it transitions from scale-driven expansion to high-quality development.