China's passenger car market is expected to bottom out and recover in 2027, with retail sales growing by roughly 2% year on year, according to Cui Dongshu, secretary general of the China Passenger Car Association (CPCA). Cui made the forecast in a post published on October 26, cited by Gasgoo.
Cui said 2026 would be "unexpectedly sluggish" due to a combination of short-term factors including the expiry of purchase tax incentives, oil price shocks, rising AI-related costs and weak consumer sentiment. He projected full-year retail sales of 18.5 million units in 2026, below both the 2025 peak of 23.74 million units and the 2020 trough of 19.29 million units. CPCA data showed retail sales of passenger cars in the first seven months of 2026 at 10.17 million units, down 20.3% year on year.
What could drive the 2027 rebound
Looking ahead to 2027, Cui said demand would be supported by the tail effect of purchase tax changes, a strong Spring Festival consumption period, lower oil prices and cost relief from falling lithium carbonate prices. On the supply side, reduced inventory destocking pressure and an improved cycle of new vehicle launches would provide support.
Industry views cited by Xinhua suggest the market will enter a steady stock phase in 2027, while the China EV100 research institute also expects the market to enter a repair period, broadly consistent with the CPCA's "bottoming and recovery" assessment.
Cui cautioned that the projected 2% growth represents a moderate repair rather than a strong recovery, and that the sustainability of inventory reduction and new vehicle supply improvements deserves closer attention.
The forecast comes as China's auto market faces intensifying competition and structural divergence among brands and segments, with the CPCA expecting differentiation to widen further through 2027.
