Asger Risom
The contrast highlights a market increasingly split between a saturated home audience and aggressive global ambitions.
China’s car market is still growing, but the pace is clearly fading. New figures show sales expansion slowing to its weakest level in years, even as exports surge and electric vehicles overtake petrol cars for the first time.
The contrast highlights a market increasingly split between a saturated home audience and aggressive global ambitions.
Growth starts to stall
Passenger vehicle sales in China rose 3.9% in 2025, their slowest growth in three years, according to data released Friday by the China Passenger Car Association. December was particularly weak, with sales down 14.5% from a year earlier.
The slowdown intensified toward the end of the year as local governments cut back or paused trade-in subsidies, citing funding pressures. That left automakers competing more fiercely in a market already crowded with models and discounts.
Several major manufacturers, including Changan, FAW, Li Auto and Nio, failed to hit their annual sales targets.
Electric cars pass a milestone
Despite the broader slowdown, electric vehicles and plug-in hybrids crossed a symbolic threshold. For the first time, they outsold petrol-powered cars on an annual basis in China.
Growth in so-called “new energy vehicles” cooled sharply, however, rising 17.6% last year compared with more than 40% in 2024. The figures suggest the market is maturing, with expansion now driven more by replacement cycles than first-time buyers.
BYD, China’s largest automaker, recorded its weakest sales growth in five years but narrowly met a reduced annual target.
Exports become the pressure valve
While domestic demand softened, exports exceeded expectations. Total vehicle exports climbed 19.4% to nearly 5.8 million units, with electric and plug-in hybrid exports jumping more than 86%, according to the CPCA.
BYD led that push overseas, selling more than one million vehicles abroad and overtaking Tesla as the world’s largest electric vehicle maker by volume, Reuters reported.
The export boom came as a surprise. Industry forecasts had expected overseas growth to slow sharply and predicted flat growth for electric exports.
A market in transition
The diverging trends point to a structural shift in China’s auto industry. At home, incentives are fading and competition is tightening. Abroad, Chinese brands are racing to secure footholds before trade barriers and political scrutiny harden further.
For now, exports are cushioning the slowdown. Whether they can continue to do so may determine how China’s car industry navigates its next phase.
Sources: Reuters; China Passenger Car Association
