In January 2026, the automotive market in China faced the most significant sales decline in the past two years. According to industry analysts, domestic sales of new vehicles dropped by 19.5% compared to the same period last year, reaching 1.4 million units.
This is reported by Finway
Reasons for the Decline in Car Demand in China
Experts attribute this sharp decrease to several factors. Among the main reasons are the rise in competition among manufacturers, a substantial reduction in government subsidies, a decline in consumer purchasing power, and increased regulatory pressure in the market.
Situation with Electric Vehicles and Market Leaders
Notably, the sales of new energy vehicles (NEVs), which had recently been a driver of growth in the Chinese automotive sector, have significantly declined. In January of this year, NEV sales fell by 22.9% compared to last year.
The leading electric vehicle manufacturer in China, BYD, reported even worse results: sales dropped by 30%—a figure that significantly exceeds the average decline across the industry.
“Leading electric vehicle manufacturer BYD experienced a 30% drop in sales, worse than the industry average.”
Despite the challenging situation in the domestic market, the export of Chinese vehicles continues to show positive dynamics. Particularly, the supply of new energy vehicles has more than doubled.
BYD currently derives nearly 50% of its global sales from outside China and aims to become a leader in the Brazilian market by 2030. Another major player, Geely, is exploring collaboration opportunities with European automakers to strengthen its position globally.