July Passenger Car Sales Forecast at 1.52 Million Units, NEV Penetration Hits 64.5%

Retail sales of passenger vehicles (narrow definition) in July are expected to reach 1.52 million units, down 5.1% month-over-month and 16.8% year-over-year. Of this, new energy vehicle (NEV) retail sales are projected at approximately 980,000 units, roughly flat month-over-month, with a penetration rate of about 64.5%, further increasing from previous levels. In the first week of July, daily average retail sales stood at 34,000 units, impacted by seasonal factors. In the second week, localized extreme weather disrupted market recovery, resulting in only a slight increase in daily average sales to 39,000 units. The third week saw high temperatures suppress travel and car-buying demand, with daily average sales reaching 47,000 units—underperforming typical seasonal trends. Sales in the fourth and fifth weeks are expected to remain weak, with year-over-year declines holding around 17%. In the first half of 2026, cumulative retail sales of narrow-definition passenger vehicles totaled 8.701 million units, down 20.2% year-over-year. NEV retail sales reached 4.704 million units, down 14.0% year-over-year, accounting for a 54.1% market share. Sales of internal combustion engine (ICE) vehicles declined by 26.4% year-over-year to 3.996 million units, reflecting continued market share erosion. July is traditionally a low season for auto sales. Compounded by demand pull-forward from June’s mid-year sales push, the market has now returned to being driven by genuine underlying demand. High temperatures, heavy rains, and flooding in multiple regions have dampened foot traffic and disrupted delivery schedules, weakening consumer purchasing intent. However, government trade-in incentives and increased new vehicle deliveries are providing a floor of support, keeping the overall auto market on a low plateau amid seasonal softness.