China Auto Sales Slumped in December Amid Slowing Demand

By Jiahui Huang

China's auto sales fell last month as the country continued to grapple with slowing demand, a sign that business conditions could remain challenging in 2026 for the world's largest car market.

Retail sales of passenger cars dropped 14% to 2.26 million units in December from a year earlier, the China Passenger Car Association said Friday. Sales rose 1.6% from November.

For the full year, retail sales of passenger cars in China rose 3.8% to 23.7 million units.

The CPCA said December's weak performance was due to consumers taking a wait-and-see approach, as the government's trade-in subsidies were set to expire by the end of the year. Beijing late last month renewed the car trade-in program for 2026 as part of a broader effort to boost consumption.

China sold more electric vehicles than gasoline-powered cars last year. Retail sales of new-energy cars, a category that includes battery EVs and plug-in hybrids, accounted for 57% of passenger-vehicle sales in 2025, the association said.

Retail sales of NEVs rose 2.6% to 1.3 million units in December, bringing the annual figure to 12.8 million units, an 18% increase.

The growth momentum of car exports remained strong as automakers, faced with a saturated domestic market, continued their aggressive expansion abroad. Exports of passenger cars jumped 46% last month from a year earlier to 588,000 units, CPCA data showed.

Tesla delivered 97,171 cars made at its Shanghai plant to Chinese buyers, and exported 3,328 units.

The near-term outlook for the world's largest auto market is encouraging, however, as Chinese carmakers and dealers usually work hard to ensure a strong start to the year.

The CPCA said China's auto market is set for a cautious but stable start to 2026, thanks to early policy support, pent-up demand and a late Lunar New Year in mid-February. It noted a pattern of strong buying by migrant workers and first-time buyers before the Lunar New Year holidays, which will likely help boost January sales.

China's auto-market sales is likely to follow a U-shaped trajectory this year, with a strong growth phase early in the year, followed by a midyear slowdown, before a rebound toward the year-end, the CPCA said. Overall vehicle sales in the domestic market are expected to be broadly flat from 2025, while exports will likely maintain double-digit growth of more than 10%, it said.

Write to Jiahui Huang at [e-mail]

(END) Dow Jones Newswires

01-09-26 0541ET