Double-digit growth in Chinese retail passenger car sales during H1 is likely to slow in the second half, as official support eases and high base levels take effect, a car industry expert told MNI.
“The 10.8% growth rate observed in the first half will be challenging to maintain in H2,” said Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), citing high base effects from 7.24% growth in the second half of last year, when authorities ramped up support, most notably through introducing a trade-in subsidy scheme.
“Strong growth in H1 this year was largely due to relatively weak policy support during the same period last year, when sales grew 3.3% y/y,” Cui said, noting the end of last month marked the first full-yearly data cycle including the old-for-new trade-in scheme. (See MNI: China Copper Demand To Accelerate In 2025)
Despite slowing growth, the trade-in scheme would still support sales ahead, Cui argued, citing Ministry of Commerce statistics that the number of trade-in applications reached 1.23 million in June, an increase of 13% from May’s 1.09 million, as evidence of continued momentum. “About 70% of private car buyers are the beneficiaries of the trade-in policy,” Cui said, noting private first-time car buyers have fallen to about 30% of applications, showing that vehicle upgrades were now driving demand.
Growth in new energy vehicles is also set to slow from January to June’s 33% y/y, given the high base levels, but Cui said the market still had room for a high rate of expansion in H2 from the first half’s 5.4 million units.
“NEV growth potential amongst middle aged and older migrant workers, who account for 21% of the population, remains strong,” Cui said, noting that the Ministry of Industry and Information Technology and Commerce kicked off a promotional campaign in June to boost NEV usage in rural counties with low penetration rate.
CPCA data showed retail sales in H1 last year reached 9.84 million units, before rising to 13.05 million and 10.901 million units in the following two halves. China’s National Development and Reform Commission in July 2024 introduced trade-in subsidies of up to CNY20,000 for new energy vehicles and CNY15,000 for fuel vehicles. Official data showed nationwide applications for the scheme exceeded 10 million by early May 2025.
EXCESSIVE COMPETITION
Government plans to cut excessive and “involuted” competition in the sector have begun taking effect, Cui said, following the government’s recent revision to the Anti-Unfair Competition Law, which had driven a reduction in the number of models participating in the price reductions between April and June.
“Only 12 models explicitly announced price reductions in May, and 14 in June, a lot less than the previous two years,” Cui said.
CPCA data showed China produced 12.7 million vehicles from January to May 2025, a year-on-year increase of 11%, with revenue up 7% y/y and profit margins at 4.3%—below the 5.7% average for downstream industrial firms, though improved from 4.1% in Jan–Apr.
“Signs of profit recovery in the industry are becoming evident with central and local governments now equally providing policy support for fuel and electric vehicles,” Cui said.