Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), noted that the B-class fuel SUV market in November declined 27% year-over-year (YoY) but rose 6% month-over-month (MoM), facing significant growth pressure. Within this segment, the B-class luxury SUV market saw a 22.6% YoY drop but a 14.6% MoM increase, outperforming mainstream B-class fuel SUVs.
This year’s traditional winter peak season has been subdued, with homogenized products experiencing sharp sales declines while differentiated models stood out, reflecting a clear trend of premium consumption upgrades. The 2025 passenger vehicle market has shown unusual monthly trends, with cumulative retail growth shifting from 1.2% in Jan-Feb to 15% in Mar-Jun, stabilizing around 6% in Jul-Sep, before dropping 8% in November. Sales from Sep-Nov remained flat, aligning with the "low start, mid-year surge, and flat end" pattern predicted earlier.
Despite weak seasonal demand since October, homogenized B-class SUVs struggled, while select premium models like the Cadillac XT5 bucked the trend, demonstrating strong consumer acceptance of new fuel-powered vehicles from leading automakers. Although Q4 faces negative growth pressure, the "14th Five-Year Plan" period has already delivered robust auto market expansion, with current sluggishness attributed to subsidy adjustments. The outlook for 2026’s "15th Five-Year Plan" remains promising.
1. **Unusual 2025 Market Trend: Strong Start, Flat Finish** While 2024 saw a "low start, high finish" in retail sales, 2025 began weakly due to factors like the Lunar New Year timing, with cumulative growth rebounding from -12% in January to 11% by June. From July to November, high base effects led to gradual deceleration, forming the "low-mid-high-flat" trajectory.
2. **November Slump: Subsidy Adjustments Bite** Since June, regional auto replacement subsidies have been paused or adjusted. By September, scrappage-related subsidies were widely suspended, slowing sales. Over half of provinces halted scrappage subsidies by October, with others imposing quotas, further dampening seasonal growth. Only Jiangxi, Guizhou, and Hainan maintained subsidies through November.
Commercial vehicle sales, unaffected by passenger car subsidy cuts, showed starkly better growth. Despite November’s YoY decline, cumulative growth since 2022 remains positive at 5%, suggesting overall stability. The "scrappage-for-new" subsidy, with 11.2 million applications by November, saw daily approvals drop to 30,000 in November as policies wound down.
3. **Fuel Vehicle Market Struggles** November fuel passenger car retail sales fell 22% YoY and 7% MoM. B-class fuel SUVs, pressured by electrification, dropped 27% YoY (up 6% MoM), while luxury B-class SUVs declined 22.6% YoY but rose 14.6% MoM. The premium segment’s resilience highlights shifting demand toward differentiated, high-value products.
4. **Growth Opportunities Amid Downturn** Luxury B-class SUVs fell 22.6% YoY in November. German brands (Audi Q5: -22%, Mercedes GLC: -23%, BMW X3: -29%) led declines, while Volvo XC60 and Lincoln Nautilus dropped 28% and 29%, respectively. Cadillac XT5 was the sole gainer (+7% YoY, 4,193 units), gaining 2.9% market share by emphasizing rational luxury (e.g., "million-grade versatility" and adaptive suspension) and safety commitments.
The shift from emotional to functional luxury and rising safety concerns are reshaping the segment. For 2026, differentiation—not conformity—will be critical.
5. **2026 Outlook: Policy Support Returns** The recent Central Economic Work Conference confirmed optimized subsidy extensions for 2026, signaling relief after Q4’s slump. The "14th Five-Year Plan" (2020–2025) saw 4.4 million additional retail sales and 5 million exports, reversing the "13th Five-Year Plan’s" stagnation. With demand for premium models evolving, automakers must sharpen differentiation to thrive in an intensifying market.
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