Policy shifts and sales fluctuations continue to affect China market

GlobalData

Wed, February 11, 2026 astatine 6:23 AM CST 5 min read

With subsidies suspended crossed a wide scope of regions, Light Vehicle (LV) income successful China recorded antagonistic maturation successful December. Total volumes reached astir 2.5 mn units, representing a 16% year-on-year (YoY) decline. The Passenger Vehicle (PV) segment, which fell by 17% YoY to 2.2 mn units, remained the superior driver, portion the Light Commercial Vehicle (LCV) conception posted a humble 1% YoY summation to 240k units. For full-year 2025, LVs inactive delivered a beardown performance, with full volumes reaching 26.9 mn units, up by 6% YoY. Similarly, connected a conception basis, some PVs and LCVs each grew by 6% YoY. The seasonally adjusted annualized selling complaint (SAAR) for December was 24.2 mn units, down by 15% compared with the aforesaid play successful 2024.

During the month, China’s LV accumulation totaled 3.1 mn units (-3.5% YoY). PV output, which accounted for 90% of the total, fell by 4.1% YoY to 2.9 mn units, but inactive pointed to sustained user request and marketplace resilience. In contrast, CV accumulation roseate by 2.5% YoY to 291k units. Domestic Chinese OEMs recorded their archetypal output decline, edging down by 0.4% YoY to 2.3 mn units, portion associated task OEMs remained nether pressure, with accumulation dropping by 11.1% YoY. On the different hand, exports were a wide agleam spot. During the month, China shipped 684k LVs, representing beardown maturation of 47.5% YoY and 3.0% month-on-month (MoM), chiefly driven by PVs arsenic overseas deliveries jumped by 48.1% YoY to 633k units. CV exports besides strengthened, rising by 42.4% YoY to 72k units. For full-year 2025, full LV exports reached 6.6 mn units, a 19.4% YoY expansion.

Overall, China’s car marketplace slowed sharply successful December, with momentum cooling rapidly—effectively a “rapid freeze”—as a operation of factors weighed connected demand. The accustomed year-end income surge, known arsenic the “tail effect”, failed to materialize, apt due to the fact that galore consumers pulled guardant their purchases successful enactment with the “Golden September and Silver October” income play and to instrumentality vantage of determination “trade-in” subsidies. As such, income done January-October roseate by 7% YoY, good supra emblematic levels successful caller years. In addition, from November onward, subsidy budgets were exhausted successful galore regions, starring to exertion suspensions that curtailed the expected policy-driven assistance and softened replacement demand. Adding to the hesitation, from 2026, the acquisition taxation connected New Energy Vehicles (NEVs) volition displacement from afloat exemption to a 50% reduction; however, details of the implementation person been delayed, prompting galore consumers to postpone their purchases and further widening the year-end request gap.