2026 China Auto Market Outlook: Steady Domestic Sales, Continued Export Growth

At the High-Level Forum on Intelligent and Electric Vehicle Development held on April 12, 2026, Xu Changming, former Deputy Director-General of the National Information Center and Senior Economist, shared his assessment of China’s automotive market trends, noting that 2026 will be characterized by “stable domestic performance and robust international growth.” Domestically, since entering the household consumption phase in 2000, China’s auto market experienced periods of ultra-high and rapid growth before transitioning into a phase of fluctuating, modest expansion starting in 2018, with an average annual growth rate of 2% to 3%. Given the current macroeconomic environment—and with multiple institutions forecasting an average GDP growth rate of 4.73% for 2026—the automotive market is expected to maintain annual sales within the normal range of 23 to 24 million units. On the policy front, China has continued and refined its vehicle trade-in programs in 2026: consumers scrapping old vehicles to purchase new energy vehicles (NEVs) receive a 12% subsidy (capped at RMB 20,000), while those buying internal combustion engine (ICE) vehicles receive a 10% subsidy (capped at RMB 15,000). Additionally, consumers trading in old vehicles for ICE cars receive a 6% subsidy. This substantial policy support is expected to remain effectively implemented throughout the year, providing solid underpinning for the market. Regarding the 22% year-on-year decline in domestic passenger vehicle demand and a 17% drop in retail sales during Q1 2026, Xu attributed the downturn primarily to delayed implementation of local policies, which led consumers to adopt a wait-and-see stance. This was compounded by short-term factors such as adjustments to purchase tax policies for low-priced EVs and rising fuel prices. Surveys indicate that most consumers have merely postponed their purchases rather than abandoned them altogether. With market conditions gradually improving since late March, coupled with the launch of over 60 new models in Q2 and intensified promotional efforts by automakers, the market is poised for a rebound in the second quarter. The sales shortfall from Q1 is likely to be recovered in Q4, resulting in overall stability for the full year. Internationally, China’s auto exports continue their rapid growth trajectory. During the 14th Five-Year Plan period (2021–2025), exports achieved leapfrog development, and in Q1 2026 alone, exports reached 2.23 million units—a 57% year-on-year increase. As global automotive markets keep expanding—primarily driven by emerging economies—Chinese automakers are presented with vast opportunities overseas. Chinese-branded vehicles have significantly enhanced their global competitiveness, with their worldwide market share rising from less than 1% five years ago to 6.5% today. They hold distinct advantages in emerging markets and the NEV segment, earning strong recognition from overseas consumers thanks to their high cost-performance ratio and positive reputation. Leading automakers such as Chery, BYD, and SAIC Motor have made exports a strategic priority, driving coordinated overseas expansion across the entire value chain—including complete vehicles, components, logistics, and financial services—further bolstering export growth. In summary, China’s automotive market in 2026 is expected to feature stable domestic sales alongside sustained, rapid export growth.