The Chinese passenger car market ended 2025 with steady growth, but with a clear structural turnaround, and CPCA expects 2026 to be driven more by trends and cycles than volume growth, according to Gasgoo.
Retail sales increased by 3.8% to 23.7 million units, but they fell by 14% in December compared with the same period last year, as the expiration of subsidies, exhaustion of local budgets for the exchange of used cars and consumer caution dampened the usual excitement at the end of the year. Despite this instability, the long-term direction is clear: local brands currently occupy 65% of the market, and new-energy vehicles have become the standard choice, reaching 54% of annual sales and almost 60% in December.
CPCA predicts that 2026 will be a "U-shaped" year: a strong start, a weakening in the middle of the year and a more stable end, which will leave the domestic retail market largely unchanged, but exports will grow by more than 10% as Chinese NEVS continue to gain popularity in the world. Replacement demand, increased ownership, and falling NEV prices should support volumes, especially in lower-tier cities, while previous exchange subsidies and new safety standards will boost demand earlier in the year and push buyers toward higher-quality mid-range and high-end electric vehicles. At the same time, inventory pressure, increased competition, and the risk of renewed price wars mean that growth will increasingly depend on technology, brand strength, and efficiency, rather than just market expansion.
