China's passenger car market continued to contract in the first three weeks of September, with retail sales down 22% year on year, according to data released by the China Passenger Car Association (CPCA) and reported by Gasgoo.
From September 1 to 20, retail sales of passenger cars in China reached 878,000 units, down 22% from the same period last year but up 8% from the previous month. Cumulative retail sales for the year stood at 12.593 million units, a decline of 21% year on year, according to the data.
Wholesale volumes fared slightly better, with manufacturers shipping 1.001 million units during the period, down 19% year on year but up 21% month on month. Cumulative wholesale deliveries for the year reached 18.184 million units, down 6%.
New energy vehicles show relative resilience
The new energy vehicle (NEV) segment, which includes BEVs (battery-electric vehicles), PHEVs (plug-in hybrids) and EREVs (range-extender electric vehicles), proved more resilient. NEV retail sales reached 596,000 units in the first 20 days of September, down 9% year on year but up 14% month on month, with year-to-date retail at 7.27 million units, down 12%. NEV wholesale volumes rose 8% year on year to 740,000 units, and cumulative wholesale reached 10.518 million units, up 9%.
NEV retail penetration hit 67.9% during the period, while wholesale penetration reached 73.9%, according to the CPCA.
The CPCA attributed the sharp overall decline to a high comparison base from September 2025, when a rush to buy before the expiry of subsidies in some regions pushed monthly retail sales to a historic peak. While the traditional "golden September" sales season and stabilising macro conditions provide some support, the high base effect has suppressed this year's recovery, the association said.
Fuel vehicle production slumps
The market is showing a zero-sum dynamic, with growth concentrated almost entirely in the new energy segment and no new demand for fuel vehicles. Gasoline price hikes totalling more than 830 yuan per tonne since late July, combined with the growing appeal of new electric models, have continued to weigh on fuel vehicle demand, according to the CPCA.
As a result, production of pure fuel light vehicles fell 52% year on year in the first three weeks of September, and fuel vehicle wholesale volumes also dropped 52%. Hybrid and plug-in hybrid models saw cumulative production of 265,000 units in the first three weeks, down 23% year on year but up 21% month on month.
The CPCA noted that while falling upstream raw material prices and a deepening industry consensus against "involution" - the intense price competition that has squeezed margins - have improved upstream profits, price pressure is now shifting to the vehicle end, and dealer operational strain continues to increase.
