2026 Auto Market Starts Cold: NEV Sales Plunge 27.5% Year-on-Year

In the first two months of 2026, China's auto market got off to a sluggish start, with total sales reaching 2.799 million units—a 23.1% year-on-year decline. Among these, new energy vehicle (NEV) sales totaled 1.126 million units, down sharply by 27.5% year-on-year, while sales of internal combustion engine (ICE) vehicles fell 19.8% year-on-year to 1.673 million units. According to data released on March 11 by the China Association of Automobile Manufacturers (CAAM), the main reasons for the downturn include policy adjustments, the Lunar New Year holiday, weak consumer sentiment, and an early surge in NEV purchases at the end of 2025. Starting in 2026, the purchase tax exemption for NEVs was halved, requiring consumers to pay a 5% purchase tax, which prompted a rush of demand in late 2025 and consequently weakened market performance at the beginning of this year.