Kaiyuan Securities released a research report indicating that in January 2026, China's passenger vehicle market was flat year-on-year but declined month-on-month, with new energy vehicle (NEV) sales facing significant pressure and the penetration rate dropping to approximately 44.4%. The market exhibited structural divergence: brands such as AITO and Xiaomi achieved high growth driven by hit models; internal combustion engine vehicles provided short-term support for some brands; while pure NEV brands like BYD COMPANY (01211) faced sales pressure. Looking ahead to 2026, the industry's focus is expected to be on premiumization development and overseas market expansion. The main views of Kaiyuan Securities are as follows.
Passenger vehicle sales in January are estimated to be roughly flat year-on-year but show a significant month-on-month decline, with NEV sales under clear pressure. As the last full sales month before the Chinese New Year, January had significantly more working days than the same period in 2025. However, influenced by factors such as the pull-forward effect from the phase-out of purchase tax exemptions and the gradual implementation of the national vehicle scrappage subsidy scheme, retail sales of passenger vehicles are expected to reach 1.8 million units, averaging 58,000 units per day, representing basic stability year-on-year but a notable decline sequentially. Specifically, according to data from the China Passenger Car Association (CPCA), the auto market was weak in the first week of January, with average daily retail sales of 30,000 units. Demand recovered slightly in the second week, reaching 50,000 units per day. In the third week, as scrappage subsidies were gradually rolled out, market activity slowly improved, with average daily retail sales expected to hit 57,000 units. In the fourth week, driven by the full implementation of subsidy policies and strengthened pre-holiday first-time purchase demand, average daily retail sales are anticipated to surge to 120,000 units. By powertrain type, sales of internal combustion engine vehicles in January are expected to be relatively supported, primarily due to winter being the traditional peak season for ICE vehicle sales and the narrowing fuel-electricity cost gap resulting from the phase-out of purchase tax exemptions. In contrast, NEVs were significantly impacted by policy and seasonal factors, with estimated January retail sales of around 800,000 units and a retail penetration rate of approximately 44.4%, indicating a substantial month-on-month decrease.
Weak NEV demand has dragged down brand sales, while hit models supported year-on-year growth for brands like AITO. Automaker sales in January showed significant divergence. Firstly, hit models and product portfolios continued to be the primary drivers of sales volume. Despite the impact of subsidy reductions, brands with popular models still achieved notable year-on-year sales growth. Specifically, Harmony Intelligent Driving Alliance (HIMA) sales reached 58,000 units in January, up 65.6% year-on-year, with AITO sales reaching 40,000 units, surging 83% year-on-year. Secondly, supported by models like the YU7, Xiaomi's sales reached 39,000 units, a 70% year-on-year increase. Leapmotor sales still grew 27% year-on-year, primarily driven by its B and C series product lineup. NIO's sales reached 27,000 units, up 96.1% year-on-year, with models like the ES8 selling strongly. Zeekr sales reached 23,800 units, soaring 99.7% year-on-year, with the 9X model performing exceptionally well in the luxury vehicle segment. Secondly, internal combustion engine vehicles provided short-term sales support for some brands. Against the backdrop of winter range anxiety for NEVs and narrowing cost-performance advantages, the existing ICE vehicle businesses of certain brands helped cushion short-term fluctuations. Specifically, GAC Group, Great Wall Motor Company Limited, and SAIC-GM saw January sales increase by 18.5%, 11.6%, and 8.2% year-on-year respectively, while Geely Auto reported a 1% year-on-year sales increase. Thirdly, pure NEV brands in the mainstream price segment faced pressure. XPeng also experienced a 34.1% year-on-year decline in January, likely significantly impacted by MONA M03 sales, and faces short-term sales pressure before new model launches.
For 2026, the report continues to favor the development directions of premiumization and overseas expansion, anticipating an industry recovery in sentiment amid a backdrop of moving away from intense internal competition. Given that the phase-out of purchase tax exemptions and tiered scrappage subsidies are expected to significantly impact NEV sales in the mainstream price segment, Kaiyuan Securities particularly favors the premiumization trend in 2026. The尊界S800 has consecutively ranked as the champion in the ultra-luxury sedan market, and the report highlights domestic ultra-luxury leader Jianghuai Automobile Group Corp., Ltd. (JAC Motors). Furthermore, models like the AITO and Zeekr 9X are seeing sustained volume growth in the high-end market, which is also expected to significantly enhance the performance of related automakers such as Seres and Geely Auto. Simultaneously, the overseas market will continue to be a key avenue for automakers to break through. In 2025, the overseas sales of SAIC Motor, Chery Group, BYD COMPANY, Geely Auto, Great Wall Motor, and Leapmotor were 1.071 million, 1.344 million, 1.050 million, 420,000, 506,000, and 60,000 units respectively. Their overseas sales targets for 2026 are set at 1.5 million, 1.5-1.6 million, 1.3 million, 640,000, 600,000, and 100,000-150,000 units respectively. Additionally, emphasis from ministries like the Ministry of Industry and Information Technology on strengthening cost investigations and price monitoring is conducive to curbing excessive competition through pricing strategies among automakers, fostering a healthier industry environment.
Risk warnings include NEV sales declining more than expected; export sales falling short of expectations; and premiumization efforts underperforming.
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