On the Dash:
- China’s vehicle sales growth is expected to slow sharply to 1% in 2026.
- EV and plug-in hybrid sales growth is forecast to fall by nearly half year over year.
- Export growth is expected to cool as trade tensions and localization efforts increase.
China’s vehicle sales and export growth are expected to slow sharply in 2026, signaling softer momentum from the world’s largest automotive market and easing near-term pressure on North American manufacturers, according to a new forecast from a major Chinese industry group.
The China Association of Automobile Manufacturers said Wednesday that total vehicle sales are projected to rise just 1% in 2026, down significantly from 9.4% growth last year. The outlook reflects weakening domestic demand amid ongoing economic uncertainty that continues to weigh on Chinese consumers.
Sales growth for electric vehicles and plug-in hybrids is also expected to moderate. CAAM forecasts a combined increase of 15.2% for electrified cars, down from 28.2% in 2025. While EVs remain a long-term focus for China’s auto industry, the pace of adoption is slowing as buyers face job insecurity and an uncertain income outlook.
Exports, which surged in recent years and raised concerns among U.S. and European policymakers, are also expected to lose momentum. CAAM projects vehicle exports will grow 4.3% in 2026, a steep decline from 21.1% growth last year. The association cited geopolitical uncertainty, trade tensions, and economic pressures as key factors limiting overseas expansion.
The slowdown could be further reinforced by regulatory scrutiny at home. Chinese authorities are tightening oversight of “zero-mileage used cars,” a practice in which automakers sell new vehicles as second-hand units at deep discounts to clear inventory. CAAM said the crackdown is likely to increase short-term inventory pressure in the domestic market, reducing manufacturers’ ability to push excess supply abroad.
In addition, CAAM noted that Chinese automakers are accelerating efforts to localize production in foreign markets to navigate trade barriers. While localization may support long-term global strategies, it also reduces the volume of vehicles exported directly from China.
For U.S. dealers and automakers, the forecast suggests that Chinese vehicle exports are unlikely to accelerate meaningfully in 2026. Instead, China’s auto sector appears headed into a period of slower growth, constrained by weaker domestic demand, tighter regulation, and rising trade and geopolitical challenges.
