Passenger Car Promotions Return to Rationality in 2025; NEV Price Cuts Sharply in First Five Months of 2026

Since 2025, promotional activities and product downgrading in China's passenger vehicle industry have become more rational, leading to a marked improvement in market order. The reinstatement of purchase tax on new energy vehicles (NEVs) has directly impacted consumers' vehicle-related tax burdens based on manufacturers' suggested retail prices. In May 2026, a total of 20 models underwent price reductions, an increase of seven compared to the same period last year. Among these, seven were conventional internal combustion engine (ICE) models (five more year-on-year), and seven were plug-in hybrid electric vehicles (PHEVs) (four more year-on-year). Analysts noted that both ICE vehicles and narrow-definition PHEVs are under significant pressure, making their price adjustments reasonable. From January to May 2026, a cumulative total of 77 models implemented price cuts, four fewer than during the same period last year. Breaking this down further: - Conventional ICE vehicles: 32 models (up by 13 year-on-year) - Hybrid electric vehicles (HEVs): 4 models (up by 1 year-on-year) - Plug-in hybrid electric vehicles (PHEVs): 16 models (unchanged year-on-year) - Range-extended electric vehicles (REEVs): 3 models (down by 4 year-on-year) - Battery electric vehicles (BEVs): 22 models (down by 14 year-on-year) In terms of pricing, the average pre-discount price of NEV models that reduced prices in May 2026 was RMB 215,000, with an average discount of RMB 21,000, representing a 9.6% reduction. From January to May 2026, the average pre-discount price of NEV models that lowered prices stood at RMB 249,000, with an average discount of RMB 31,000, amounting to a 12.5% decline.