MNI INTERVIEW: China's Q4 Car Sales Robust, Despite Slowdown

China’s domestic retail passenger car market is expected to remain stable in Q4, even as sales growth moderates from the double-digit pace seen earlier this year, a senior automobile industry expert told MNI. 

Passenger car sales growth slowed to 13.2% y/y in September, compared with 13.7% during the first nine months of the year, but robust demand for new energy vehicles (NEVs) continues to provide solid support, said Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA). 

Strong growth in commercial vehicles such as buses provided further support, benefiting from structural trends towards electrification, with September sales surging 29.6% year-on-year to 368,000 units, compared with a 7.8% increase over the first nine months, Cui added. However, significant pressure was expected in 2026, he said, noting the likely phase-out of the full purchase-tax exemption for NEVs starting next year. The government has extended the NEV purchase-tax exemption several times in recent years but looks set to reduce it from 100% to 50% between Jan 1, 2026, and Dec 31, 2027, he noted.

Cui called on the government to implement long-term follow-up policies to shore up growth next year, such as reducing or exempting individual income tax for car buyers, promoting the adoption of new energy vehicles in rural areas and introducing incentives for marriage and childbirth. 

The government’s 2025 auto sales target of 34.5 million units remains achievable, he continued, supported by the sale of 24.3 million units from January to September and by national consumption policies, including over CNY100 billion in government bonds to spur replacement or upgrading of durable goods such as vehicles. 

EXPORTS

China’s automobile exports are also expected to remain firm in Q4 after rising 21.0% y/y in September, faster than the 14.8% seen in the first nine months.

“After a sharp drop in shipments to Russia in late 2024 due to tighter trade restrictions, signs of recovery are emerging,” Cui said, noting China’s expansion into Central and South America, Southeast Asia, and Africa would fuel growth during the 15th Five Year Plan period.  

China’s manufacturers' R&D efficiency gave carmakers an overwhelming competitive edge internationally, with a product iteration cycle of only one-two years, compared with about four years in Europe and the U.S., Cui noted. 

ANTI-INVOLUTION

Following efforts by the government to tackle excessive or involuted price competition in industry including automobiles, Cui said China’s car market is entering a more rational and sustainable phase, marked by fewer price cuts and less aggressive discounting. 

According to CPCA data tracking officially announced price reductions or new-car pricing below historical lows, 23 models saw price cuts in September 2025, down from 36 models a year earlier and 11 models in September 2023. 

With the push against excessive competition, Cui noted that dealer inventory in September fell to 620,000 units, down 260,000 units from the peak, a decrease of 30%, helping improve overall inventory pressure in the industry.