In recent news from June 24, 2026, mainland China’s car sales decline is dragging down the consumer data from May. Facing pressure in the auto market, on June 23 (Tuesday), the departments such as the Ministry of Commerce of the Chinese Communist Party issued two notifications, announcing 40 pilot cities, attempting to boost the market from the circulation of automobiles and post-sales consumption stages.
According to reports from mainland media, the 40 pilot cities involve various directions. The pilot program in Tianjin includes car modifications, traditional classic cars, and car races; Shenyang in Liaoning focuses on the circulation of used cars; Yangzhou in Jiangsu emphasizes RV camping; and Weinan in Shaanxi involves the recycling and utilization of scrapped cars. The notifications state that pilot cities need to propose measures to address so-called “unreasonable restrictions” in automobile circulation consumption.
On the same day, the Ministry of Commerce of the Chinese Communist Party and nine other departments also issued another notification, presenting 17 measures in six areas, including car modifications, RV camping, traditional classic cars, car maintenance and insurance, car racing, car leasing, among other fields.
Data released by the National Bureau of Statistics of the Chinese Communist Party in China recently showed that the total retail sales of consumer goods in China in May amounted to 4.109 trillion yuan, a decrease of 0.6% year on year. Among them, the retail sales of automobiles were 330.9 billion yuan, a 16.1% decrease year on year, which has notably impacted the overall consumer data.
The Beijing Business Daily recently cited data from the China Automobile Dealers Association Passenger Car Market Information Joint Branch, stating that in May, a total of 1.51 million passenger cars were sold nationwide, a 22.1% decrease year on year; the cumulative retail sales this year totaled 7.099 million vehicles, a 19.5% decrease year on year.
Compared to the 16.1% decrease in retail sales of automobiles, the drop in passenger car sales in May was even more significant. The data reflects that despite price reductions and promotions by car manufacturers, the pressure of the downturn in the car market has not yet eased.
Looking at the vehicle type structure, retail sales of both gasoline cars and new energy vehicles in mainland China decreased year on year in May. As reported in Dajiyuan on June 9, citing data from the Passenger Branch of the Association, retail sales of gasoline cars in China dropped by 39% year on year in May, while new energy vehicle sales decreased by 7%. Analysis from the Gaishi Auto Network, a Chinese automotive industry information service platform, mentioned that the core feature of the car market in May was the decline in domestic sales of gasoline cars, with gasoline cars accounting for 82% of the total reduction in passenger cars.
The entry-level electric vehicle market is also under pressure. Gaishi Auto Network stated that in May, wholesale sales of A00-class pure electric vehicles (micro pure electric vehicles with a length of less than 3.8 meters or a wheelbase of less than 2.5 meters) decreased by 44% year on year, with market share shrinking from over 20% to 10%. The article attributes this trend to the gradual reduction of subsidies, cost pressures from raw materials, and weakened consumer demand, putting pressure on low-end economical electric vehicles.
Furthermore, the profitability of the Chinese auto industry continues to decline. Over the years, the Chinese authorities have supported the automotive industry with subsidies and industrial policies to promote expansion of car manufacturers. Official data indicates that by 2025, Chinese automakers will have a production capacity exceeding 50 million vehicles, twice the actual output in 2024. The surplus of production capacity and brands far exceeding market demand have resulted in widespread profitability pressures on car manufacturers and dealers. As the “subsidy for scrapping old vehicles and replacing them with new ones” policy diminishes, the downward pressure on the car market continues to manifest.
Statistics from the Association over the years show that from 2019 to 2021, the profit margin of the automotive industry remained above 6%; from 2022 to 2025, it decreased to 5.7%, 5.0%, 4.3%, and 4.1% respectively. In the first quarter of this year, the profit margin of the automotive industry was only 3.2%, below the average level of the manufacturing industry.
The Economic Daily previously reported that by the end of the first quarter of this year, the total accounts payable and notes of 18 listed car companies primarily engaged in passenger cars amounted to 1.034 trillion yuan, still exceeding one trillion yuan; the average payment turnover days in the automotive industry increased to 216.68 days, up by 27 days from the end of last year. The report stated that more than half of the corporate payment cycles further extended.