January Auto Sales Plunge 28% YoY; NEV Drop 16% Amid Policy Rollback

From January 1 to 18, retail sales of passenger vehicles in China totaled only 679,000 units, a sharp year-on-year decline of 28%. Among these, new energy vehicles (NEVs) accounted for 312,000 units sold, down 16% year-on-year. The China Passenger Car Association (CPCA) released this data on January 21, attributing the sales slump primarily to policy adjustments. The NEV purchase tax exemption policy, in place since 2014, will begin phasing out in 2026, when a 5% purchase tax will be reinstated. This has prompted consumers to either hold off on purchases or delay buying decisions, putting short-term pressure on the market. Cui Dongshu, Secretary-General of the CPCA, noted that the automotive market environment in 2026 will be complex, and the current sales decline has already exceeded expectations.