China's passenger car market saw a sharp decline in September, with retail sales dropping 24% year-on-year to 1.702 million units, according to data from the China Passenger Car Association (CPCA) as reported by Gasgoo. The decline was attributed to a high comparison base from a year earlier and the shift of the Mid-Autumn Festival holiday. Month-on-month, retail sales grew 10%.
Wholesale volumes for the month reached 2.528 million units, down 10% year-on-year but up 7% from August. In the first nine months of the year, cumulative retail sales totaled 13.418 million units, a 21% drop, while wholesale volumes fell 6% to 19.711 million units.
NEV sales and penetration
New energy vehicles (NEVs) remained a bright spot. In September, retail sales of NEVs, which include BEVs (battery-electric vehicles), PHEVs (plug-in hybrids), and EREVs (range-extender electric vehicles), reached 1.141 million units, down 12% year-on-year but up 14% month-on-month. Wholesale NEV volumes rose 11% year-on-year to 1.672 million units. The NEV retail penetration rate hit 67.1%, while wholesale penetration stood at 66.1%.
Production data for the first three weeks of September showed a 52% year-on-year drop in pure fuel light vehicle output to 330,000 units, while hybrid and plug-in hybrid production totaled 265,000 units, down 23%.
Profitability and market dynamics
The industry's profitability continued to weaken. From January to August, the automobile industry generated revenue of 7.0062 trillion yuan (about $986.8 billion), up 2.9% year-on-year, but profits fell 16% to 253.4 billion yuan (about $35.7 billion), bringing the sales profit margin to 3.6%. August alone saw a margin of 4%. Rising costs for raw materials and semiconductors, coupled with weak demand, are squeezing automakers' earnings.
On the global stage, China's share of world auto sales slipped to 32.0% in the first eight months of 2026, down from 35.4% in 2025, as total global sales reached 63.43 million units, up 2%. China's NEV share of the global market was 62%, and it held a 71% share of the world's plug-in hybrid market.
Demographic shifts are also reshaping the market. While marriage registrations rose 10.8% in 2025 to 6.765 million couples, the overall trend points to fewer first-time buyers and an aging population. By the end of 2025, 23.0% of China's population was aged 60 or above. Growth is increasingly driven by replacement purchases, upgrades to NEVs, and mobility solutions for the elderly, according to Gasgoo.
