China Auto Sales Slide 14.8% as EV Tax, Subsidy Shift Bite
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China’s domestic auto market got off to a frigid start this year, with sales tumbling 14.8% from a year earlier in January as the industry grappled with a shift in government support policies.
Total domestic sales fell to 1.665 million vehicles last month, down 33.9% from December, the China Association of Automobile Manufacturers (CAAM) said Wednesday.
Two main factors drove the slump. Although national authorities unveiled new trade-in subsidy policies at the end of 2025, implementation details in many regions remain pending, meaning incentives have yet to be fully rolled out. At the same time, the government adjusted the purchase tax on new-energy vehicles starting in 2026. After benefiting from a full exemption since September 2014, buyers are now required to pay a 5% tax, effectively raising acquisition costs.
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- China’s auto sales fell 14.8% YoY in January 2026 to 1.665 million units; NEV sales declined 18.9% to 643,000 units.
- Tax increases and slow policy rollouts after 2025 subsidies hit low-cost NEVs hardest; BYD’s sales dropped 30.1%.
- NEV passenger car penetration dropped to 41.7% in January from 54% for 2025; further contraction in low- and midrange NEV sales is expected.
- BYD Co. Ltd.
- BYD Co. Ltd. is an NEV-only carmaker that was China's top-selling automaker in 2024 and 2025. In January, their sales plunged 30.1% year-on-year to 210,000 units, dropping them to fourth place in the market. This decline is attributed to a shift in government support policies for new-energy vehicles.
- SAIC Motor Corp. Ltd.
- SAIC Motor Corp. Ltd. secured the top spot in China's auto market in January, reporting sales of 320,000 vehicles, a 24.5% increase. This performance positioned them ahead of other major players like BYD, Geely Automobile Holdings Ltd., and FAW Group Corp. Ltd., despite an overall downturn in the market.
- Geely Automobile Holdings Ltd.
- Geely Automobile Holdings Ltd. was the third-highest selling automaker in China in January, placing behind SAIC Motor Corp. Ltd. and ahead of BYD Co. Ltd. This marks a positive performance amid a challenging market, as overall domestic auto sales declined significantly.
- FAW Group Corp. Ltd.
- FAW Group Corp. Ltd. was among the top-selling automakers in China in January, ranking third after SAIC Motor Corp. Ltd. and Geely Automobile Holdings Ltd. No further details are available in the article regarding this company's sales figures or performance.
- September 2014：
- Buyers of new-energy vehicles began benefiting from a full purchase tax exemption.
- End of 2025：
- Chinese national authorities unveiled new trade-in subsidy policies.
- December 2025：
- Total domestic vehicle sales in China were 2.52 million units (calculated from the 33.9% drop to 1.665 million in January 2026).
- January 2026：
- China’s domestic auto market sales dropped 14.8% year-on-year and 33.9% from December 2025, totaling 1.665 million vehicles. Domestic NEV sales dropped 18.9% year-on-year to 643,000 units. Gasoline vehicle sales fell 11.9% year-on-year to 1.022 million units. NEV passenger car penetration rate slid to 41.7%. Sales in the sub-80,000-yuan NEV segment plunged 49.9% year-on-year. BYD sales dropped 30.1% year-on-year to 210,000 units, falling to fourth place. SAIC took the top spot with 320,000 units sold, up 24.5%.
- By January 2026：
- Implementation details for new trade-in subsidy policies have not been fully rolled out in many regions.
- Starting 2026：
- Chinese government adjusted the purchase tax on new-energy vehicles, ending the full exemption since September 2014 and instituting a 5% tax.
- Mid-January 2026：
- A CAAM official stated that NEV sales growth for vehicles priced below 150,000 yuan would likely slow markedly in 2026.
- Late January 2026：
- Cui Dongshu predicted a 'severe contraction' in sales of small and micro electric vehicles in 2026 and noted that aggressive incentives in 2024 and 2025 had pulled forward future sales.
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