Recent surveys show that up to 80% of automobile dealerships in China hold a pessimistic view on their business performance in November, with only 8.2% of dealerships believing that December will see improved operations. Dealerships are facing challenges such as increased inventory, decreased customer flow, and narrowing profit margins. The China Automobile Dealers Association predicts a 2.1% year-on-year decline in the Chinese passenger car market next year.
On November 30, the China Automobile Distribution Association released the latest data from the “China Automobile Dealership Inventory Alert Index Survey.” The survey indicates that “up to 80% of dealerships hold a pessimistic view on the November market, believing that the overall performance has not met expectations.”
Dealerships are equally pessimistic about their expectations for December. Only 8.2% of dealerships anticipate improved business conditions in December, a 1.7 percentage point decrease from the previous month. The proportion of dealerships expecting a poor market in December has increased from 17.7% to 20.3%, a rise of 2.6 percentage points.
Analysis by “First Financial” revealed that this figure is only slightly better than expectations for July (8.1%) this year, marking one of the lowest levels this year.
The Deputy Secretary-General of the China Automobile Distribution Association, Lang Xuehong, shares the view of dealerships, indicating that there may not be a significant year-end surge in the car market this year.
Lang analyzed that on one hand, manufacturers are introducing various policies to support car purchases, while on the other hand, overall promotional efforts in the car market are relatively moderate. With the combined effect of these two factors, consumers are not rushing to buy cars. Especially for some popular new energy vehicle models constrained by delivery times, orders for this year will be postponed to next year for delivery completion.
The survey also shows that the November China Automobile Dealership Inventory Alert Index is 55.6%, an increase of 3.8 percentage points compared to the same period last year and an increase of 3.0 percentage points from the previous month. The inventory alert index is above the balance line, indicating a decrease in the overall prosperity of the automobile distribution industry.
Currently, dealerships are facing challenges of reduced customer traffic, increased market-watch sentiment leading to demand contraction, and narrowing profit margins in new car sales. Additionally, some manufacturers are adding tasks at year-end to boost sales, further exacerbating dealership inventory backlog and tight liquidity issues.
The proportion of dealerships expecting a “decrease” in market demand in December is 32.3%, an increase of 7.5 percentage points from the previous month.
According to data released by the China Automobile Distribution Association, as of the end of 2024, the national scale of 4S dealerships decreased by 2.7% compared to the previous year, marking the first decrease in nearly four years.
At the Lithium Industry Outlook Exchange Meeting during the 2nd China International Lithium Conference on November 24, 2025, Cui Dongshu, Secretary-General of the China Automobile Distribution Association’s Passenger Car Market Information Joint Branch (referred to as the “Passenger Car Association”), stated that in 2026, sales and ownership of new energy vehicles will continue to reach new highs, with a projected penetration rate of over 60%. However, under the dual influence of macroeconomic pressure and policy adjustments, the passenger car market in 2026 is expected to reach 23.8 million vehicles, a 2.1% decrease compared to the previous year.
According to a joint announcement released by the Chinese Ministry of Finance, the State Administration of Taxation, and other departments in 2023, no vehicle purchase tax will be levied on new energy vehicles purchased between January 1, 2024, and December 31, 2025, with a tax exemption not exceeding 30,000 yuan. For new energy vehicles purchased between January 1, 2026, and December 31, 2027, the vehicle purchase tax will be halved, with a tax reduction not exceeding 15,000 yuan.