Chinese Spend Less on Cars After Government Scales Back Support

China’s automotive spending plunged 12.6% year-on-year in the first half of 2026, the sharpest drop among all consumer goods, as reduced government subsidies and imposition of a purchase tax on new-energy vehicles (NEVs) battered the market.

The contraction underscores the growing strain on the world’s largest auto market as Beijing pivots its policy focus from subsidizing car purchases to cultivating untapped automotive aftermarket.