In January, the wholesale penetration rate of NEVs reached 44.3%, with domestic independent brands hitting 57.9%. Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), released the “Analysis Report on the Operating Characteristics of China’s Passenger Car Market in January 2026.“ Following the formal exit of the new energy vehicle (NEV) purchase tax exemption policy in December 2025, the market is currently in a normal recovery phase. Some consumers advanced their purchases to take advantage of the policy benefits last December, resulting in a demand overdraft effect in January. In January 2026, national passenger car retail sales reached 1.55 million units, down 14% year-on-year and 32% month-on-month. This decline was in line with expectations, primarily due to the expiration of the NEV purchase tax exemption policy at the end of December 2025, which pulled forward some consumer demand. The growth rate falls within the middle range of the dramatic fluctuations historically seen in January. CPCA Passenger Car Domestic Monthly Retail Trend In stark contrast to the short-term adjustment in domestic retail, the export market performed exceptionally strongly. In January, passenger car exports (including complete vehicles and CKD kits) reached 576,000 units, up 52% year-on-year, setting a new record for January in any year and fully demonstrating the competitiveness of China’s automotive industry in the global market. The Secretary-General of the CPCA summarized the market operations this month into the following six characteristics: Record-high exports: Passenger car manufacturers’ exports hit a new January record, with overseas demand remaining robust. Retail structure optimization: Following the exit of the purchase tax exemption policy, the proportion of high-end NEVs increased significantly, reflecting the trend of consumption upgrading. Easing price wars: With the advancement of “anti-internal competition” efforts, the promotional intensity for NEVs in January remained at a moderate level of 10.1%, stable for five consecutive months, with no malignant price competition observed. Continuation of historical patterns: The historical pattern of ICE vehicles outperforming NEVs before the Spring Festival reemerged, with pure electric retail down 17% year-on-year, while extended-range models achieved 1% year-on-year growth. Divergent penetration rates: The domestic retail penetration rate for NEVs in January was 38.8%, while the export penetration rate reached as high as 50.5%. Surging NEV exports: Independent brand NEV exports reached 226,000 units, skyrocketing 115% year-on-year and accounting for 47.5% of total independent brand exports, with significant growth in Europe, Southeast Asia, and other regions. Data shows that passenger car production in January was 2.01 million units, down 4% year-on-year, with production remaining steady. As domestic retail was lower than wholesale, and wholesale was lower than production, the overall passenger car industry inventory decreased by 110,000 units in January (compared to a decrease of 80,000 units in the same period last year), indicating a state of passive destocking by manufacturers. Trend of Comprehensive Promotion Intensity for New Energy Passenger Cars In terms of promotional intensity, the overall market remained stable in January, with dealers focusing more on maintaining profitability, though promotional strategies diverged across different powertrain types. Tracking Promotional Intensity by Powertrain Among them, the promotional intensity for NEVs rebounded to a high of 10.1%; promotions for traditional ICE vehicles declined to 23.7%, while luxury vehicle promotions gradually reached 28.8%. Luxury vehicle promotions gradually reached 28.8%, up 2.5% year-on-year, driven by enhanced demand from consumption upgrading. By powertrain type, plug-in hybrid vehicle promotions increased by 2.5 percentage points year-on-year, showing significant volatility; while pure electric and extended-range models maintained relatively moderate promotional intensity. Growth Characteristics of Passenger Cars by Country (of Origin) From a segment perspective, independent brands retailed 890,000 units in January, down 18% year-on-year, with a domestic retail market share of 57.5%, down 3.5 percentage points year-on-year. Mainstream joint venture brands retailed 470,000 units, down only 4% year-on-year, showing relatively stable performance. Among them, German and Japanese brand retail shares increased by 1.3 and 2.1 percentage points year-on-year, respectively. Data shows that A00-class sedan retail was relatively low, while A0-class sedans and C-class SUVs became the main retail drivers in January, with strong demand for premium SUVs. New Energy Vehicle Retail Penetration Rate Specifically in the NEV market, the wholesale penetration rate for NEVs reached 44.3% in January, up 1.3 percentage points from the same period last year. Among them, the penetration rate for independent brand NEVs was as high as 57.9%. Affected by the policy exit, the domestic retail penetration rate was 38.8%, down 3 percentage points year-on-year. The retail penetration rate for NEVs among independent brands still reached 61.7%, while mainstream joint venture brands stood at only 4.3%.
