MNI INTERVIEW: China Domestic Car Sales To Stabilise In 2027

China’s domestic car sales are expected to return to modest growth in 2027 but remain below 2025 levels after contracting this year, a leading industry expert told MNI, noting that strong export performance will offset weak domestic demand in the near term.

Domestic sales will recover to about 29 million units in 2027 and 2028, with annual growth of 0% to 2%, said Cui Dongshu, secretary of the China Passenger Car Association.

China internally sold 30.1 million units in 2025, but domestic sales fell sharply in Q1 this year, with 4.22 million passenger vehicles sold—a 17.4% decline year-on-year, which Cui attributes to the reduction of government subsidies at the end of last year.

Chances for a stronger rebound in 2027 and 2028 remain limited, Cui said, citing structural constraints such as vehicle ownership saturation and a peak in population car-buying age. Simultaneously, replacement demand for new energy vehicles will increase steadily and intelligent upgrades will also support incremental replacement demand, providing a mild lift to overall sales, he continued.

Internal combustion engine vehicle sales will continue to decline, while new energy vehicle penetration will remain high and underpin the market, Cui added. 

In the short term, sales will remain under heavy pressure through the rest of the year, Cui said, but added that rapid export growth will offset the decline, keeping total wholesale volumes broadly flat at 0% to 1% year-on-year.

EXPORTS

Exports will account for 28% of total production this year, up from 22% last year, Cui said, arguing that weak domestic conditions will push automakers to accelerate overseas expansion.

Cui recently raised his 2026 export growth forecast to 35% y/y, up from an earlier estimate of between 18% to 25%, after Q1 saw a 124% y/y surge in overseas sales. (See MNI INTERVIEW: Geopolitics Add To China Export)

Although Chinese automakers are becoming increasingly reliant on exports, the dependence remains manageable, he said.

Key risks include rising global trade barriers, tariff restrictions in Europe and the U.S., regional policy volatility and pressure on profitability and brand positioning from low-price export strategies, Cui added. 

By 2030, exports will account for around 35% of total production, with overall output reaching 40 million units, Cui estimated. Automakers will expand overseas manufacturing and diversify market exposure, with ASEAN, the Middle East, and Latin America driving growth, while Europe will remain strategically important, he said. 

Vehicle exports and localised production will shift the globalisation of China’s automotive industry from a short-term supplement to a core long-term growth driver, Cui said.