The market was able to maintain a strong growth momentum after the typical "golden September" peak season—a noteworthy feat which indicates that underlying demand drivers, including the ongoing vehicle replacement cycle and local government support policies for consumption, have kept the market at a high level.
At the same time, we should also note that the growth rate this month has slightly slowed as local governments have tightened their trade-in subsidy policies. Total sales reached approximately 2.6 million units, reflecting a steady 4% YoY increase. The PV segment, which grew by 4% YoY to 2.4 million units, continued to be the primary driver, while the LCV segment posted a solid 3% YoY gain to 196k units. Across January-October as a whole, PVs delivered a strong performance, with an expansion of 11% YoY. The seasonally adjusted annualized selling rate (SAAR) for October was 28.7 million units, remaining at a historically high level.
During October, China’s LV production reached 3.2 million units, marking a solid YoY increase of 10.2%. PVs, which accounted for 90% of total output, rose by 10.3% YoY to 3.0 million units, underscoring strong consumer demand and market resilience. CV production also performed well, climbing by 10.0% YoY to 266k units. Domestic Chinese OEMs produced 2.4 million units—a notable 12.0% YoY increase—while joint venture OEMs also posted gains of 5.7%. In January-October, the overall LV market achieved cumulative growth of 12.2% relative to the same period in 2024.
Meanwhile, China’s LV exports reached 624k units in October, marking a robust YoY increase of 21.3% and a MoM rise of 2.2%. Growth was primarily driven by PVs, whose overseas shipments rose by 21.7% YoY to 565k units. CV exports also recorded steady growth of 17.7% YoY to 59k units. From January to October as a whole, cumulative auto exports totaled 5.2 million units, reflecting a 13.6% increase compared with the same period last year. As such, China's auto exports continue to maintain a strong upward momentum, as evidenced by the double-digit growth projected in October 2025.
China has strategically adjusted its car replacement policy, decisively shifting from unlimited subsidies to a restricted lottery system. Following successful pilot programs in Sichuan and Shanghai, the policy has now been implemented nationwide. This transition to a regulated allocation mechanism has effectively managed the subsidy budget without stifling market activity, thus creating a more sustainable demand-driven mechanism. This careful adjustment coincides with the robust growth of China’s LV market. The policy adjustment particularly benefits the NEV industry, accelerating its green transformation and ensuring the effective allocation of fiscal resources through precise fiscal intervention.
Looking ahead, policy phasing out may drive year-end growth. With the tax exemption for NEVs expiring this year and the upcoming 5% increase in the vehicle purchase tax set to take place next year, consumers are feeling a stronger sense of urgency to buy cars in the final months of 2025, thus prioritizing delivery times when choosing models. However, considering the high base from the same period last year due to short-term policy stimulus, coupled with the continued tightening of subsidy policies, the growth rate in the final two months may weaken.
Exports have continued their strong growth. Since entering H2, China's automobile shipments have remained on an upward trajectory, with increasing acceptance of domestically produced NEVs in overseas markets and strong growth in some sectors. As instability emerges in international supply chains, such as those for semiconductors, the advantages of China's automotive industry chain are further highlighted, and the positive momentum of its exports is expected to continue. Although the external trade environment is more complex, continued growth in emerging markets will offset the decline in the Russian market.
Starting on January 1, 2026, China’s NEV industry will enter a new phase of policy refinement, with updated technical requirements for vehicle and vessel tax (VVT) exemptions. The updated requirements will significantly increase the minimum pure electric range to 100 km, while imposing stricter limits on fuel consumption in charging mode and energy consumption in pure electric mode. For pure EVs and FCEVs, the policy framework will remain relatively stable but more refined. Pure EVs must be included in the new “New Energy Vehicle and Vessel Tax Exemption Catalogue,” while FCEVs must meet a 300 km pure hydrogen range requirement.
To ensure market stability, the government has implemented transitional measures: NEVs purchased before 2026 or included in the previous catalogue will continue to enjoy tax exemptions without the need for reapplication. This approach ensures a smooth policy transition while systematically guiding the industry toward more advanced and environmentally friendly vehicle technologies.
