Retail sales of passenger vehicles in China, including sedans, MPVs, and SUVs, declined by over 15% to 1.648 million units in March 2026 from 1.940 million units a year earlier, according to data compiled by the China Passenger Car Association (CPCA).
The Chinese domestic light passenger vehicle market is struggling with the recent slowdown in economic growth in the country, in part due to the import tariff hikes by the US last year, and also due to the recent withdrawal of some government subsidies and tax exemptions for new energy vehicles (NEVs). GDP growth slowed to 4.5% year-on-year in the fourth quarter of 2025, down from 4.8% in the third quarter, although recent government stimulus measures are expected to have supported stronger domestic consumption growth in the first quarter of 2026.
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In the first three months of 2026, the vehicle market declined by almost 18% to 4.226 million units from 5.127 million units in the same period last year, with all major segments falling sharply.
Retail sales of new energy vehicles (NEVs) declined by 14% to 848,000 units in March and by 21% to 1.908 million units year-to-date. Retail sales of BEVs fell by 12% to 568,000 units last month, while PHEV sales fell by 19% to 280,000 units.
Exports of NEV rose by just over 1% to 1.144 million units in March, driven by a 6.1% increase in PHEV shipments to 352,000 units, while BEV exports fell by 2% to 695,000 units.
Earlier this year, the Chinese government confirmed that it will continue its vehicle trade-in subsidy programme in 2026, as part of its broader policy of driving up domestic consumption, but has reduced its NEV purchase tax incentive from a full exemption to a 50% discount. GlobalData forecasts a 1.5% increase in light vehicle sales to 27.3 million units in 2026, up from 26.9 million units in 2025, followed by a 3% decline in 2027 as the effectiveness of government incentives wears off.
