Auto Industry in 2025: Rising Sales, Shrinking Profits — Margin Drops to 4.1%, December Profits Plunge 57.4%

In 2025, China's automotive industry continued to see growth in production, sales, and revenue, but profitability remained under persistent pressure. Total annual revenue reached RMB 11.18 trillion, up 7.1% year-over-year, while profits amounted to only RMB 461 billion, a modest increase of 0.6% compared to the previous year. The overall profit margin declined to 4.1%, significantly lower than the industrial average of 5.9%. New energy vehicles (NEVs) emerged as the primary growth driver, with output reaching 16.52 million units—a 25% year-over-year increase—and their market penetration rising to 48%. However, this surge failed to translate into meaningful profit gains. Intense price competition and high costs associated with the NEV transition—including substantial R&D investments and channel development—pushed cost growth (8.1%) ahead of revenue growth. In December alone, industry profits plummeted by 57.4% year-over-year, with the monthly profit margin dropping to 1.8%, the lowest level in recent times. Despite better inventory reduction and accounts receivable management compared to other industrial sectors, the industry continues to grapple with a structural challenge characterized by "rising volumes but weakening profits."