China carmakers push exports as domestic sales slump

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China carmakers export push

Highlights

China Passenger Car Association reports domestic passenger car retail sales through September fall 21.7% year-on-year to 13.33 million units, forecasting a 22% full-year drop.
Sales of new-energy vehicles, including EVs, decline 12.8% from January through September, intensifying pressure as sector competition and margin erosion accelerate.
Auto manufacturing profits shrink 22.8% year-on-year for January–September despite a 15.5% overall industrial profit rise, prompting firms to cut costs and pursue export growth.

Domestic demand weakens across China auto market

As reported by CNBC, weaker consumer confidence is hitting vehicle demand in China as an unstable job market, falling property prices and reduced policy incentives curb big-ticket spending.

Car salesman Li Ke said the 2026 "golden September and silver October" sales season is the slowest he has seen in 26 years on the job, aside from the Covid-19 pandemic. Speaking from a largely empty showroom in Beijing, he said dealerships that once signed deals daily are now closing only two to three sales a week.

Passenger car retail sales in China total 13.33 million units through September, down 21.7% from a year earlier, according to the China Passenger Car Association. The group says full-year domestic passenger car retail sales in 2026 are set to fall 22% to 18.5 million vehicles, below the level recorded in the first year of the pandemic.

Even new-energy vehicles, once a key growth segment, are declining. Sales of these vehicles, including EVs, drop 12.8% from January through September, adding to pressure on an industry already dealing with intense competition and shrinking returns.

Export pressure rises as profits and margins erode

The slowdown at home is reinforcing why Chinese carmakers are looking abroad for growth. Analysts say fierce competition and bruising price wars in recent years have pushed manufacturers to expand exports, while Beijing remains wary that trading partners such as the U.S. and Europe could respond with coordinated barriers against rising Chinese car shipments.

Profitability is also worsening across the sector. China National Bureau of Statistics data show industrial profits in the first nine months of the year rise 15.5% from the same period in 2025, but September shows weaker momentum than the prior eight months; within auto manufacturing, profits from January to September shrink 22.8% from a year earlier.

Dealers are also cutting costs to preserve cash. Li says his dealership leaves a more expensive roadside site for a lower-rent location with less foot traffic, and he sees little value in offering deeper discounts as margins erode further. In his view, the bigger obstacle is a cautious consumer mindset, with buyers delaying purchases rather than spending quickly.

Our earlier coverage of China’s late-September policy support and third-quarter growth outlook highlighted an economy still struggling to build momentum despite targeted rate cuts, mortgage subsidies, and additional government debt quotas. We noted that exports and factory output were helping offset weak household spending and persistent property-market stress, keeping domestic demand a central vulnerability even as overall GDP growth was expected to edge up slightly.

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