China auto retail sales forecast to fall 22% this year, rebound in 2026
China's passenger car retail sales are forecast to drop 22 per cent this year to 18.5 million units, a decline linked to geopolitics, AI investment costs and raw material prices. A recovery of up to 5 per cent is expected in 2026 if conditions stabilise, according to an industry body.
A Chinese automotive industry body has forecast that the country's passenger car retail sales will fall by about 22 per cent year on year in 2025, with a possible rebound of up to 5 per cent in 2026.
Cui Dongshu, secretary general of the China Passenger Car Market Information Joint Sub-committee, said in a social media post that the market this year has faced multiple short-term shocks, leading to an unusually low performance. He estimated that full-year retail sales would reach only 18.5 million units, a decline of about 22 per cent from the previous year. Cui described the situation as abnormal, noting that sales have clearly deviated from the long-term trend of the past decade.
Cui attributed the downturn not to a structural deterioration but to a combination of factors. These include higher oil prices driven by geopolitical conflicts, and a surge in costs linked to increased investment in artificial intelligence, which has pushed up prices for raw materials such as energy-storage components and copper. He said these cost pressures have affected the profitability of new-energy vehicles. The timing of vehicle trade-in policies has also had an impact, he added.
Looking ahead, Cui predicted that China's auto retail market could recover next year, with growth ranging from zero to 5 per cent year on year, provided there are no unexpected changes in policy or market conditions. He cited several factors that could support a recovery, including the upcoming Lunar New Year holiday, a potential correction in international oil prices, a decline in lithium carbonate prices, and an improvement in the supply cycle for new vehicles.