Passenger Vehicle Sales Decline 25.4% Year-on-Year in February, Reaching 1.034 Million Units

Data from the Passenger Vehicle Association reveals that national passenger vehicle retail sales from February 1st to 28th totaled 1.034 million units. This represents a year-on-year decrease of 25.4% and a month-on-month decline of 33.1%. Cumulative retail sales for the year to date stand at 2.578 million units, down 18.9% compared to the same period last year.

Market factors are complex, and recent years have shown a distinct pattern of sales being "lower in the first half and higher in the second half" of the year. The timing of the Lunar New Year holiday significantly impacts February sales, leading to substantial annual fluctuations. For example, February year-on-year changes were -19% in 2019, -79% in 2020, +373% in 2021, +5% in 2022, +10% in 2023, -21% in 2024, and +26% in 2025. Against this backdrop, the -25.4% change in February 2026 falls within the mid-to-lower range of these historical swings.

Following the expiration of the new energy vehicle (NEV) purchase tax exemption policy at the end of December 2025, the NEV market in 2026 is in a recovery period as it adjusts to the new tax regime. Some consumers advanced their purchases in 2025 to benefit from the expiring policy, leading to an anticipated short-term "pull-forward" effect and a corresponding dip in sales for January-February 2026. This volatility is expected and does not reflect the long-term market trend. However, with the Lunar New Year falling later this year, overall consumption patterns are strong, yet growth in the auto market is diverging. NEV performance remains relatively weak, indicating a continued need for policy support.

Key characteristics of the February 2026 passenger vehicle market include: 1. Average daily passenger vehicle exports by manufacturers reached a record high for the month of February, underscoring the rising global competitiveness of China's automotive industry and robust overseas demand. 2. The post-tax-exemption retail sales decline was pronounced, but structural shifts are evident. The share of premium NEVs increased while entry-level consumption decreased, supporting the industry's transition towards higher-quality development. 3. New model launches in 2026 have been steady. Coupled with efforts to curb disorderly price-cutting, the NEV promotion discount rate held at 10.4% in February, remaining around 10% for six consecutive months. This stability helps prevent vicious, volume-driven price competition and maintains market order. 4. The historical trend of internal combustion engine (ICE) vehicles outperforming NEVs before the Lunar New Year continued. In February, domestic retail sales of ICE vehicles fell 19% year-on-year. Within the NEV segment, battery electric vehicle (BEV) retail sales dropped 35%, extended-range electric vehicles (EREVs) fell 16%, and plug-in hybrid electric vehicles (PHEVs) declined 31%. As consumers adapt to the normalized tax environment for NEVs, the market is expected to return to a growth trajectory. 5. The pre-holiday consumption phase in February was dominated by ICE vehicles. Nevertheless, the domestic NEV retail penetration rate was 44.9%, and the export penetration rate reached 48.5%, indicating a relatively strong performance. 6. Exports of self-branded ICE passenger vehicles reached 247,000 units in February, up 21% year-on-year. Self-branded NEV exports surged to 231,000 units, a 110% increase, accounting for 48.4% of total self-branded exports. Rapid growth in NEV exports to regions like Europe and Southeast Asia highlights the expanding international influence of Chinese NEV brands, laying a solid foundation for future export growth.

Self-branded retail sales in February were 630,000 units, down 30% year-on-year and 29% month-on-month. Their share of the domestic retail market was 61.2%, a decrease of 4.3 percentage points year-on-year. Self-brands achieved significant growth in the NEV and export markets. Several leading traditional automakers demonstrated excellent performance in their transformation efforts, with brands like GEELY AUTO, Chongqing Changan Automobile Company Limited, and Great Wall Motor Company Limited notably increasing their market share.

Mainstream joint-venture brand retail sales were 270,000 units in February, down 19% year-on-year and 43% month-on-month. German brands held an 18.2% retail share, up 1.2 percentage points year-on-year. Japanese brands held a 12.1% share, up 1.5 percentage points. American brands held a 6.8% share, up 1.8 percentage points. The share of Korean brands saw a slight increase.

Luxury vehicle retail sales were 130,000 units in February, down 12% year-on-year and 27% month-on-month. The luxury brand retail share was 12.7%, up 2.0 percentage points year-on-year, indicating some stabilization in the traditional luxury market.

Exports: According to association data, passenger vehicle exports (including complete vehicles and CKD units) reached 555,000 units in February, up 56.0% year-on-year but down 4.4% month-on-month. NEVs accounted for 48.5% of total exports, an increase of 15 percentage points compared to the same period last year. Self-brand exports reached 478,000 units, up 52% year-on-year. Joint-venture and luxury brand exports were 77,000 units, up 85% year-on-year.

Production: Passenger vehicle production was 1.373 million units in February, down 21.0% year-on-year and 31.5% month-on-month. Luxury brand production fell 9% year-on-year and 40% month-on-month. Joint-venture brand production fell 22% year-on-year and 32% month-on-month. Self-brand production fell 22% year-on-year and 30% month-on-month.

Wholesales: Wholesale sales by passenger vehicle manufacturers nationwide reached 1.518 million units in February, down 14.3% year-on-year and 23.0% month-on-month. Influenced by retail adjustments, the year-on-year wholesale growth rate was 11.1 percentage points higher than the retail growth rate. Wholesales from self-owned automakers were 1.074 million units, down 14% year-on-year and 19% month-on-month. Mainstream joint-venture automaker wholesales were 283,000 units, down 20% year-on-year and 32% month-on-month. Luxury vehicle wholesales were 161,000 units, down 2% year-on-year and 30% month-on-month.

The wholesale landscape among major manufacturers continued to evolve. Automakers including GEELY AUTO, SAIC Motor Passenger Vehicle, Tesla Motors, GAC Toyota, Dongfeng Motor, Leapmotor, Li Auto, GAC Trumpchi, NIO, BAIC Motor Passenger Vehicle, and Beijing Hyundai achieved year-on-year growth in wholesales. In February, three manufacturers had wholesale sales exceeding 100,000 units, accounting for 36% of the total market share.

Inventory: With stable production in February, manufacturer wholesales exceeded production by 150,000 units. However, manufacturer-level retail sales exceeded domestic wholesales by 70,000 units. Consequently, total passenger vehicle channel inventory decreased by 220,000 units in February, a sharper decline than the 40,000-unit reduction seen in the same period last year. This indicates that automakers focused on reducing production and destocking this year, whereas last year's inventory drop was driven by retail demand.

New Energy Vehicles: Production of new energy passenger vehicles reached 645,000 units in February, down 21.3% year-on-year. Cumulative NEV production for January-February was 1.585 million units, down 10.1% year-on-year. NEV wholesale sales reached 723,000 units in February, down 13.1% year-on-year. Cumulative NEV wholesale sales for January-February were 1.589 million units, down 7.9% year-on-year. Wholesale sales of conventional ICE passenger vehicles were 800,000 units in February, down 15% year-on-year.

NEV retail sales reached 464,000 units in February, down 32.0% year-on-year. Cumulative NEV retail sales for January-February were 1.060 million units, down 25.7% year-on-year. Retail sales of conventional ICE passenger vehicles were 570,000 units in February, down 19% year-on-year.

NEV manufacturer exports surged to 269,000 units in February, up 124.7% year-on-year, though down 7.0% month-on-month. Cumulative NEV exports for January-February were 559,000 units, up 114.7% year-on-year. Exports of conventional ICE passenger vehicles were 290,000 units in February, up 21% year-on-year.

1) Wholesales: The NEV wholesale penetration rate was 47.6% in February, up 1.0 percentage point from February 2025. The NEV penetration rate for self-brands was 58.9%; for luxury vehicles, it was 48.2%; while for mainstream joint-venture brands, it remained low at only 4.6%. BEV wholesale sales were 421,000 units, down 12.2% year-on-year and 16.9% month-on-month. Plug-in hybrid (PHEV) sales were 246,000 units, down 12.9% year-on-year and 11.5% month-on-month. EREV wholesales were 55,000 units, down 20.1% year-on-year and 32.1% month-on-month. The wholesale structure for NEVs in February was: BEVs 58.3%, PHEVs 34.1%, and EREVs 7.6%. 2) Retail: The domestic retail penetration rate for NEVs within the total passenger vehicle market was 44.9% in February, down 4.0 percentage points year-on-year. Within domestic retail, the NEV penetration rate for self-brands was 64.5%; for luxury vehicles, it was 32.6%; and for mainstream joint-venture brands, it was only 4.5%. In terms of domestic NEV retail share, self-brands held 60.3% in February, down 12.0 percentage points year-on-year. Mainstream joint-ventures held 3.1%, up 1.2 percentage points. New automakers, driven by brands like Leapmotor, Li Auto, and NIO, held a 27.3% share, up 7.0 percentage points year-on-year. Tesla Motors held an 8.2% share, up 4.3 percentage points. 3) Exports: NEV passenger vehicle exports were 269,000 units in February, up 124.7% year-on-year. They accounted for 48.5% of total passenger vehicle exports, an increase of 14.8 percentage points year-on-year. BEVs constituted 58% of NEV exports. As China's NEV sector demonstrates scale advantages and seeks market expansion, Chinese-made NEV brands are increasingly entering international markets, gaining growing recognition overseas. PHEVs accounted for 38% of NEV exports, showing rapid growth in developing markets despite some external challenges. Leading companies in NEV exports for February included BYD, GEELY AUTO, Chery Automobile, Tesla China, SAIC Motor Passenger Vehicle, Leapmotor, SAIC-GM-Wuling, Dongfeng Motor, Chongqing Changan Automobile Company Limited, Volvo Asia Pacific, Smart China, XPeng Motors, Polestar, Changan Mazda, Great Wall Motor Company Limited, and Dongfeng Honda. 4) Automakers: Overall NEV manufacturer performance was strong in February. BYD's dual-drive strategy with BEVs and PHEVs solidified its leading position among self-brands. PHEV performance from companies like BYD, GEELY AUTO, and Chery remained robust. With self-owned automakers pursuing multi-technology strategies, the market base continues to expand. Sixteen manufacturers achieved NEV wholesale sales exceeding 10,000 units in February, accounting for 90.9% of total NEV wholesales. Domestically, NEV retail sales surpassed 20,000 units for brands including BYD, GEELY AUTO, Tesla China, Chongqing Changan Automobile Company Limited, Harmony Intelligent Driving, Li Auto, NIO, and Xiaomi Auto. 5) New Automakers: New automakers held a 27.3% retail share in February, up 7.0 percentage points year-on-year. BEVs accounted for 73.4% of their sales, a significant increase. Independent NEV brands launched by traditional self-owned automakers performed strongly, holding a 17.1% share, up 3.0 percentage points year-on-year. Brands like Deepal, Voyah, Zeekr, and Arcfox demonstrated excellent performance. 6) Hybrids: Wholesale sales of standard hybrid electric vehicles (non-plug-in) were 52,000 units in February, down 3.4% year-on-year and 29% month-on-month. Key players included GAC Toyota, FAW Toyota, Changan Ford, Dongfeng Honda, and GAC Honda. The hybrid market remains relatively strong, with self-brand hybrids showing good performance in overseas markets.

Outlook for March 2026 National Passenger Vehicle Market: March 2026 has 22 working days, one more than March 2025. As industries resume normal operations after the Lunar New Year holiday, month-on-month production and sales growth in March is expected to be significant. The post-holiday period is a key time for new model launches, and many manufacturers are introducing new vehicles. Supported by national consumption stimulus policies and corresponding measures from local governments, along with the full resumption of auto shows and offline events, market activity is likely to accelerate.

However, with prices for key materials like lithium carbonate and copper remaining high, and efforts against excessive competition continuing, the launch of new NEV models with unexpectedly high cost-performance ratios is expected to be limited. Therefore, the potential for a explosive recovery in consumer demand is modest. Although recent crises in the Middle East pose some transport disruptions, Chinese automakers are transitioning from chartering ships to building and controlling their own fleets, enhancing shipping capacity, control, cost-efficiency, and resilience. This provides stronger sales assurance compared to international peers, suggesting exports will not be severely impacted if the crisis is short-lived.

With the full implementation of national vehicle replacement policies, the consumption potential for scrapping old vehicles and purchasing new ones will be gradually released, benefiting a gradual strengthening of the market in March. In 2026, policy support and structural optimization are key factors for stimulating overall market prosperity and accelerating the shift towards premium NEVs. Although the 250 billion yuan allocation for consumer goods replacement subsidies in 2026 is 50 billion yuan less than in 2025, a separate 100 billion yuan fund for fiscal-financial coordination to boost domestic demand, through measures like loan interest subsidies and financing guarantees, can reduce purchasing costs for consumers and financing costs for automakers. This is expected to effectively stimulate endogenous consumption momentum and expand new spaces for domestic demand.