In January 2025, the automotive market experienced a modest slowdown compared to the robust performances seen in preceding years. The early arrival of the Spring Festival prompted many consumers to complete their purchases ahead of the celebrations, in late 2024.
In terms of Light Vehicle (LV) sales, a total of 1.9 mn units were sold in January 2025 (excluding exports), marking a 2.1% year-on-year (YoY) decrease and a significant 34.3% month-on-month (MoM) decline, attributable to the elevated sales base in the previous month. When segmented by model type, Passenger Vehicle (PV) sales accounted for the majority with 1.8 mn units sold, which also represented a 2.4% YoY decline and a 34.9% MoM drop. In contrast, Light Commercial Vehicle (LCV) sales demonstrated a relatively stable start to the year, with a 0.4% YoY increase, but still suffered a substantial 27.0% MoM decline. The January selling rate stood at 24.4 mn units/year, representing an approximate 15% decrease from the strong December performance. In YoY terms, sales in January contracted by 2%, despite the fact that volumes in the same period of 2024 were also lackluster.
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Wholesale volumes in January 2025 reached a historical nadir, while retail sales were only higher than those recorded in 2020 and 2023 within the past decade. It is anticipated that 2025 will exhibit a trend characterized by a “slow start and strong finish”, influenced by the Spring Festival and the transition of subsidy policies throughout the year. Furthermore, it is projected that the market share of domestic independent brands will continue to expand. In 2025, the continuous innovation of independent brands, encompassing product strength and channel management, is expected to garner sustained support and recognition from consumers. Additionally, the potential for a price war persists, but it is expected to be less intense. The significant price reductions seen during 2024 led to a temporary suppression of market sales and an annual U-shaped trend. This year, the intensity of companies’ participation in the price war has weakened, indicating that price competition will likely be more moderate.
Despite these factors, the influx of increasingly affordable and attractive high-tech New Energy Vehicle (NEV) models is anticipated to sustain market growth. BYD Auto’s introduction of its “God’s Eye” autonomous driving system at the start of the year has significantly impacted the Chinese market. This state-of-the-art system has been integrated into nearly all of BYD’s models, including entry-level vehicles priced below $10,000, establishing a new standard for cost-effective Autonomous Vehicles (AVs). This strategic move enhances driver safety and convenience, while exerting competitive pressure on rivals. Following the announcement, BYD’s stock price surged over 4% to an all-time high, while competitors such as Xpeng Motors and Geely Auto saw their stock prices decline, reflecting the market’s acknowledgment of BYD’s technological advancement and competitive edge.
This development has the potential to accelerate the dominance of Chinese brands in the market, as other major Chinese Electric Vehicle (EV) manufacturers are likely to follow suit. In contrast, foreign automakers, such as Tesla, are falling behind in providing comparable advanced technology in China. Although Tesla has recently offered Chinese customers software upgrades and Full Self-Driving (FSD) functions similar to the US version through over-the-air (OTA) downloads, the short-term market feedback has been less than ideal. However, as data in China continues to improve, local manufacturers will be compelled to optimize algorithms and expedite the deployment of end-to-end models, which will objectively drive the entire industry forward.
In January 2025, total LV production reached 2.4 mn units, marking a modest YoY increase of 2.3%. The PV segment was the primary growth driver, with production totaling 2.1 mn units and a YoY increase of 2.5%. Meanwhile, the CV sector experienced a marginal improvement, with production rising by 0.8% YoY to 233k units. The overall market continued the differentiation trend observed in the previous year. Chinese OEMs produced a total of 1.6 mn units, achieving a YoY growth rate of 13.5%. In stark contrast, joint venture (JV) OEMs faced a downturn, with a YoY slump of -15.6%. The production cuts by JV automakers have somewhat limited the overall output growth in the Chinese market. This shift highlights the transformation occurring in the country, where local automakers are advancing, while JV brands need to reassess their strategies to maintain competitiveness.
In terms of exports, China’s LV shipments amounted to 440k units in January 2025, representing a 7.1% YoY increase. The PV segment was the primary contributor to this growth, with 391k units exported, marking a 6.9% YoY rise. At the same time, the CV segment exported 48k units and registered an 8.6% YoY increase.
China’s auto exports in 2025 face several significant risks. The US is expected to impose higher tariffs on Chinese vehicles, which could reduce demand and increase costs for exporters. Meanwhile, the European Union has already introduced additional tariffs on Chinese EVs, which are expected to slow export growth. Shipments to Russia are also likely to decline due to economic sanctions and geopolitical tensions. These challenges highlight the uncertainties and potential headwinds that Chinese automakers may face in maintaining export growth in 2025.
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
