Domestic Auto Sales and Spending Drop in First Half of 2026 Amid Significant Policy Shifts

In the first half of 2026, domestic automobile sales declined by 21.1% year-on-year, falling to 9.921 million units. Sales value of automobiles dropped by 12.6% year-on-year to RMB 1.97 trillion, marking the steepest decline among all consumer goods categories. The share of auto-related consumption in total retail sales of consumer goods fell to 7.9%, down from its usual level of around 10%. Policy adjustments significantly impacted the market: at the beginning of the year, revisions to the vehicle trade-in subsidy program reduced subsidies available for lower-priced models, and the exemption on purchase tax for new energy vehicles (NEVs) was replaced with a 5% tax rate. These two policy changes influenced consumer purchasing decisions and exacerbated the market’s downward trend.