China Auto Industry Profit Margin Drops to 3.8% in H1 2026 Amid Rising Costs

In the first half of 2026, China's automotive industry reported a total profit of RMB 195.4 billion, down 20% year-on-year. The industry’s profit margin stood at 3.8%, below the average of 6.5% for downstream industrial enterprises during the same period. Vehicle production totaled 15.1 million units, a 4% year-on-year decline. Total industry revenue reached RMB 5,189.3 billion, up 1.8% year-on-year, while total costs amounted to RMB 4,610 billion, rising 2.8% year-on-year. Revenue per vehicle averaged RMB 344,000, up 5% year-on-year; cost per vehicle was RMB 305,000, increasing by 6%; taxes and fees per vehicle totaled RMB 25,000, up 7.1%; and gross profit per vehicle stood at RMB 13,000, down 17.7% year-on-year. In June, driven by strong sales of premium models and rising export demand, the industry’s sales profit margin rebounded to 5.2%, up from 3.7% in March–April. However, automakers continued to face profit pressure due to rising upstream lithium carbonate costs and a sharp increase in domestic battery prices. Most vehicle manufacturers do not engage in battery production themselves, leaving them with limited bargaining power in the new energy vehicle (NEV) supply chain and exacerbating profitability challenges. In response, organizations including the China Automotive Battery Industry Innovation Alliance recently issued the “Initiative on Standardizing Payment Practices for Power and Energy Storage Battery Suppliers,” aiming to address payment issues within the supply chain.