Domestic Passenger Car Market to See Decline in ICE Vehicles, Surge in NEVs by May 2026

In May 2026, China's passenger vehicle market exhibited a pattern of "overall pressure coupled with pronounced structural divergence." The internal combustion engine (ICE) vehicle segment continued to shrink, serving as the primary driver behind the overall retail decline. Meanwhile, the retail penetration rate of new energy vehicles (NEVs) reached a record high of 62.9%, indicating that the pace of electrification is accelerating faster than expected. Mainstream joint-venture brands accelerated their transition toward electrification, with domestic NEV retail sales surging 51% year-over-year in May. Notably, NEVs accounted for 45% of Buick’s total sales during the month. Chinese自主品牌 also made significant inroads into the premium segment, capturing over 50% of retail market share in each of the RMB 200,000–300,000, RMB 300,000–400,000, and above-RMB-400,000 price brackets. Concurrently, the micro-EV and A-segment vehicle markets faced mounting pressure, highlighting an urgent need for supportive policies and standards in the entry-level consumer segment. On the export front, NEVs represented 54% of total vehicle exports in May—the highest share on record—underscoring how the combined momentum of NEVs and Chinese自主品牌 has become the core driver of overseas expansion for Chinese automakers.