China's car sales fall for 10th consecutive month amid weak domestic demand

Aug 11, 2026

China's domestic car sales fell for a 10th consecutive month in July 2026, with retail sales sliding around 21% year-on-year to approximately 1.47 million vehicles. Subdued domestic demand, elevated fuel prices, and moderating replacement subsidies have pressured local sales. To offset this domestic slowdown, Chinese automakers are aggressively expanding overseas, driving an 88.2% surge in exports to 923,000 vehicles in July 2026, led by electric and plug-in hybrid models.

China domestic car sales decline

▪China's domestic car sales fell for a 10th consecutive month in July 2026, with retail sales of passenger cars sliding 21.1% year-on-year to 1.47 million vehicles.
▪According to the China Passenger Car Association, retail sales of passenger cars in China fell 20.9% in July 2026 from a year earlier to 1.46 million units, representing an 8.8% decline compared with June 2026.
▪For the first seven months of 2026, domestic passenger vehicle sales in China declined 20.5% year-on-year, representing about 2.65 million fewer vehicles sold.

Weak consumer spending pressures

▪Deutsche Bank analyst Bin Wang stated that Chinese automakers are expected to face continued margin pressure in the second half of 2026 from increased promotional activities and rising sourcing costs for lithium batteries and semiconductor memory.
▪China Passenger Car Association secretary-general Cui Dongshu attributed the domestic auto market weakness in July 2026 to elevated fuel prices and subdued demand for entry-level sedans.
▪HSBC analysts stated in July 2026 that replacement demand in China's auto market moderated after subsidy-driven pull-forward, while consumers became increasingly selective amid frequent product launches.

Strong export growth overseas

▪New-energy vehicles continued to gain market share in China, accounting for 65.1% of total auto sales in July 2026.
▪China's car exports rose 88.2% in July 2026 to 923,000 vehicles, contrasting with the decline in domestic sales.
▪Chinese exports of electric vehicles and plug-in hybrids grew 147.8% year-on-year in July 2026, while their domestic sales dropped 3.9%.

Premium versus affordable vehicle demand

▪China Passenger Car Association secretary-general Cui Dongshu stated that Chinese consumers are looking for affordability and strong value for money, even as automakers attempt to move upmarket.
▪Chinese carmakers are entering the premium domestic segment with larger, feature-packed models, such as Xiaomi's extended-range SkyNomad SUV series.

Automaker overseas expansion strategies

▪Geely Auto and Ford reached an agreement in July 2026 for Geely to build electric SUVs at Ford's plant in Spain to jointly develop a model for Europe.
▪Chinese automakers are expanding production capacity and market access abroad by tapping underutilized factories owned by traditional carmakers.

BYD Leapmotor competitive performance

▪Stellantis-backed Leapmotor reported global sales of more than 100,000 vehicles in July 2026, more than doubling its sales from a year earlier.
▪BYD recorded record overseas shipments in July 2026, helping lift its global sales for a third consecutive month despite a slowing domestic market in China.