Auto industry profit margin dropped to 4.1% in 2025; December’s 1.8% hit a recent low. Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), released an analysis report on the profits of China’s industrial enterprises for 2025. The data shows that for the full year of 2025, industrial enterprises achieved profit growth, reversing the declining trend of the previous three consecutive years. Specifically, in 2025, automobile production reached 34.78 million units, a year-on-year increase of 10%. The automobile industry’s revenue amounted to 11.1796 trillion RMB, up 7.1% year-on-year; costs were 9.8498 trillion RMB, an increase of 8.1%; and profits reached 461 billion RMB, a slight year-on-year increase of 0.6%. Automobile Industry Sales Profit Trend Looking at the historical trend of sales profit margin, the automobile industry’s profit performance had already shown signs of weakness in 2024, with a sales profit margin of only 4.3%, significantly lower than the historical average. In 2025, the industry’s sales profit margin further dropped to 4.1%, with December’s 1.8% profit margin hitting a recent low. The report points out that against the backdrop of increasing raw material cost pressures in the midstream and downstream industries, the overall per-vehicle revenue in the automobile industry chain in 2025 was 321,000 RMB, while per-vehicle costs decreased by 13,000 RMB, resulting in a per-vehicle gross profit of 13,000 RMB for the industry chain. 2017-2025 Automobile Industry Performance Data Table Examining the annual trends in the automobile industry in detail: In 2025, automobile production reached 34.78 million units, a year-on-year increase of 10%; new energy vehicle (NEV) production was 16.52 million units, up 25% year-on-year, with a penetration rate of 48%; conventional fuel vehicle production was 18.25 million units, down 1% year-on-year. Cui Dongshu analyzed that, recently, with the expansion of automobile production scale and the rise in the Producer Price Index (PPI), upstream lithium carbonate costs have increased. The issue of automakers not producing their own batteries has become more pronounced, leading to a continuous decline in automaker profits. Considering the downward trend in profit margins over the past few years, the automobile industry’s profit decline remains significant. Despite the clear advantages of new energy policies supported by government measures, mainstream automakers will still face sharply increasing profit pressure due to their reliance on external battery supplies.