China’s loght vehicle (LV) market continued its strong performance in May 2025, with sales rising by 10% YoY to approximately 2.1 million units. The increase was primarily driven by robust demand for PVs (passenge vehicles or cars), which expanded by 12% YoY to 1.9 million units, representing 88% of total LV sales for the month.

Government stimulus measures played a crucial role in supporting the market’s performance, particularly the extended vehicle trade-in and scrappage incentive programs. These policies significantly boosted domestic demand, with NEVs being notable beneficiaries. In contrast, LCV sales suffered a moderate 9% YoY decline. On a YTD basis, LV sales in January-May grew by 12% compared to the same period in 2024. The national subsidy program that encourages consumers to replace older vehicles with newer models remained a key driver of spending. The seasonally adjusted annualized selling rate for May stood at 27.9 million units, a 5% decrease from April’s figure but still a historically strong level.

The Chinese government has been instrumental in accelerating the growth of the LV market through a comprehensive suite of supportive policies. The extension of vehicle trade-in and scrappage incentive programs—now valid until the end of 2025—has significantly boosted domestic demand, particularly for NEVs. These incentives, which include additional subsidies of up to CNY5,000 ($698) for NEV purchases compared to traditional fuel vehicles, have effectively lowered ownership costs and encouraged consumer adoption.
The rapid expansion of China’s e-commerce sector has profoundly impacted the LV market, particularly in the Commercial Vehicle segment. The surge in online retail and last-mile logistics has heightened demand for LCVs, which are now a critical component of modern supply chains. However, despite this structural demand, LCV sales in May saw a modest 9% YoY decline, reflecting broader macroeconomic pressures and a shift in business investment patterns.
In May 2025, total LV production reached 2.6 million units, marking an 11% YoY increase, though only a 1% MoM rise. YTD production for 2025 stands at 12.3 million units, up by 13% compared to the same period last year. PVs, which account for 90% of total LV output, continued their strong performance with May production hitting 2.3 million units (+12% YoY). In contrast, LCV production grew marginally by 0.5% YoY to 263k units, underscoring the segment’s slower recovery amid shifting logistical demands and policy focus on NEVs.
In May 2025, China’s LV exports continued their upward trend and reached 519k units—a 15% YoY increase. This figure made up 20% of total LV production, underscoring the growing importance of overseas markets. The PV segment remained the key growth driver, with shipments rising by 17% YoY to 467k units. In contrast, CV exports saw a slight 0.5% YoY decline to 53k units, reflecting subdued global demand for logistics and transport equipment. On a cumulative basis, China’s auto exports totaled 2.1 million units in the first five months of 2025, up by 6% YoY.

US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe recent interim agreement in US-China trade negotiations—which reduced mutual tariffs until August 10, 2025—has provided temporary relief to exporters. However, the long-term outlook remains uncertain as negotiations continue, with potential policy shifts posing risks to trade flows.
The export market has become a critical pillar of China’s LV industry, contributing significantly to production volumes and manufacturer revenues. While current growth trends are positive, the sector faces headwinds from geopolitical tensions, evolving trade policies, and competitive pressures in key markets. Automakers are closely monitoring developments, as any further changes in tariffs or trade rules could materially impact the export sector in the second half of 2025 and beyond.
Based on stronger-than-expected market performances in recent months, we have revised our 2025
full-year forecast upward by approximately 200k units. This adjustment reflects the resilience of both domestic demand and export markets, which have demonstrated limited sensitivity to US tariff policies thus far.
Domestically, market growth continues to be primarily policy-driven, with promotional incentives and trade-in schemes remaining crucial demand drivers. However, the export sector faces a more nuanced risk profile. While Russia currently serves as the largest single export destination, potential market contraction there would require alternative demand sources to compensate. The industry’s ability to diversify exports to other emerging markets—particularly in Southeast Asia, the Middle East, and Latin America—will be critical in maintaining overseas growth momentum.
Moving forward, we remain cautiously optimistic in terms of the outlook. The domestic market’s policy-supported foundation appears stable in the near term, though export strength will depend on both geopolitical developments and manufacturers’ capacity to adapt to shifting global trade patterns. Continued monitoring of Russian market dynamics and trade policy evolution remains essential for risk assessment.


This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.