Auto Industry Profit Margins Hit Record Low in 2025 as NEV Sales Approach 50%

In 2025, China’s automobile production and sales reached 34.531 million and 34.4 million units respectively, up by 10.4% and 9.4% year-on-year. Passenger vehicle production and sales surpassed the 30-million-unit mark for the first time. New energy vehicles (NEVs) accounted for 47.9% of total annual sales, with their share climbing to 52.3% in December alone. Despite the industry’s total revenue reaching RMB 11.18 trillion (a 7.1% year-on-year increase), costs rose even faster—up 8.1% year-on-year to RMB 9.85 trillion. As a result, the sector’s annual profit totaled only RMB 461 billion, a mere 0.6% increase from the previous year. The sales profit margin fell to a record low of 4.1%, significantly below the average for industrial enterprises. In December alone, the profit margin plummeted further to 1.8%, as revenues declined while costs continued to rise, intensifying profitability pressures. Key factors weighing on industry profits include intense price competition, persistently high raw material costs, and substantial R&D and marketing expenditures driven by the ongoing transition toward electrification and intelligent technologies.