Retail sales of locally-produced passenger vehicles in China, including sedans, MPVs, and SUVs, rose by less than 5% to 1.995 million units in August 2025 from 1.906 million units in the same month last year, according to data compiled by the China Passenger Car Association (CPCA).

August was the seventh consecutive month of growth for the domestic passenger vehicle market, as consumers responded to government sales incentives, including an incentivised trade-in programme for old cars, as well as aggressive price competition among local manufacturers. Growth has slowed sharply in the last two months, however, after the government called on vehicle manufacturers to rein in their aggressive price war.

The Chinese government earlier this year confirmed that it would continue to fund its subsidy programmes at least until the end of 2025, but ordered local vehicle manufacturers to rein in their excessive discounting, which is seen as damaging the profitability and prospects of the country’s smaller, less established electric vehicle (EV) brands.

Retail sales of Chinese-owned brands rose by 9% to 1.32 million units in August, according to the association, accounting for two-thirds of total passenger vehicle sales in the country. New energy vehicle (NEV) sales rose by just 5% year-on-year to just over 1.079 million units last month, a much slower rate of growth than in the first half of the year. In the first eight months of 2025, overall passenger vehicle retail sales in China rose by 9.5% to 14.741 million units from 13.464 million units in the same period last year, driven higher mainly by strong demand for sedans and SUVs. NEV sales increased by 25% to 7.540 million units in this period, equivalent to 51% of total passenger vehicle sales.