Automotive sales in China are down 20% this year and pacing for their worst annual performance in five years.
China’s car market is on track to post its worst year since 2021 as weak consumer demand led vehicle sales to decline 20.2% in the first half of this year.
The steep decline comes after China’s passenger vehicle sales hit record levels in 2025.
Consequently, the China Passenger Car Association has lowered its 2026 full-year sales forecast to a decline of 14% from an earlier forecast of flat sales year-over-year.
The association now forecasts final delivery volume of 20.4 million passenger vehicle units by the end of this year, down from a record 23.7 million units in 2025.
Passenger vehicle sales for the first half of this year totaled 8.7 million units.
Some analysts are predicting even weaker automotive sales this year, with declines of 20% or more compared to the association’s full-year forecast of a 14% decline.
Weak consumer spending in China has worsened due to rising gasoline costs caused by the Iran war and a pullback in electric vehicle subsidies offered by the Chinese government.
Transportation costs rose 15.3% year-over-year in June of this year, according to data from China’s National Bureau of Statistics, driving a collapse in demand for gas-powered vehicles.
At the same time, Beijing’s pullback on electric vehicle subsidies has also tempered consumer demand for fully electric automobiles.
Leading Chinese automakers include BYD (BYDDY), Nio (NIO) and Geely (GELYF), among others.
