Retail sales of locally-produced passenger vehicles in China, including sedans, MPVs, and SUVs, rose by just over 6% to 1.834 million units in July 2025 from 1.723 million units a year earlier, according to data compiled by the China Passenger Car Association (CPCA).

July was the sixth consecutive month of growth for the domestic vehicle market, as consumers continued to respond to government sales incentives, including an incentivised trade-in programme for old cars, as well as aggressive price competition among local manufacturers.

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

Retail sales of passenger new energy vehicles (NEVs) rose by 12% year-on-year to just over 1 million units in July, much slower than the 30% growth seen in June, as manufacturers responded to the government’s calls to cease their aggressive price war, at least for the moment.

In the first seven months of 2025, overall passenger vehicle retail sales in the country rose by 10% to 12.736 million units from 11.568 million in the same period last year, driven higher mainly by strong demand for sedans and SUVs. NEV sales increased by 30% to 6.472 million units in this period, equivalent to 51% of total passenger vehicle sales.