China's car market heads for worst year since 2021 as sales fall 20%
China's automotive market is facing a significant downturn, with sales projected to fall 14% to 20% in 2026. Analysts attribute the decline to intense competition, rising fuel costs, and the withdrawal of government subsidies for new energy vehicles.
Why it matters
As the world's largest car market, a sustained slump in Chinese auto sales has major implications for global manufacturers and the transition to electric vehicles.
China's car market appears to be headed for its worst year since 2021, as consumer demand for passenger vehicles tumbles following record-high sales in 2025 .
After passenger vehicle sales fell by 20.2% in the first half of the year, the China Passenger Car Association lowered its 2026 full-year retail sales projection to a decline of 14% from an earlier forecast of flat year-on-year sales.
It is forecasting a final delivery volume of 20.4 million units at the end of 2026, down from a record 23.7 million units last year. Cumulative sales for the first half of the year currently stand at 8.7 million units.
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