Text: Tan Qing Talks AI

Recently, a slew of automakers have rolled out their sales targets for 2026, prompting netizens to quip: Are they selling cars as if they were cabbages?

Among the emerging forces, HIMON Intelligence, Leapmotor, and NIO have all set lofty goals. HIMON Intelligence is aiming for 1-1.3 million vehicles, Leapmotor is challenging for 1 million, and NIO is targeting over 450,000.

Even Xiaomi, a newcomer to the scene, has directly set its sights on 550,000 vehicles for 2026, openly flaunting its ambition.

Traditional automakers are not lagging behind either: Geely, Changan, and Chery are all striving to surpass the 3 million mark. Although Great Wall Motors leads in growth rate, it has quietly tempered its expectations slightly.

So far, nine automakers/alliances have announced their targets, summing up to a staggering 18.339 million vehicles!

But that's not all—BYD and SAIC, two automotive 'giants,' have yet to unveil their targets. Last year, each sold nearly 4.6 million vehicles. Including other players like Li Auto, the industry's 2026 target is soaring straight towards 30 million vehicles.

Yet, the question lingers: Will there truly be such a colossal new demand in 2026?

The Domestic Market May Cool Down in 2026

The automotive industry is currently facing a 'tough exam': the market is gradually transitioning from incremental to stock-based growth, intensifying challenges. According to data from the China Passenger Car Association, although passenger car sales rose by 4% year-on-year to 23.744 million vehicles in 2025, more than half of this growth was policy-driven, leaving limited room for natural growth.

This stock-based competition compels automakers to tackle 'three hurdles' simultaneously: profitability, production capacity, and transformation.

In terms of profitability, the price war has escalated, particularly in the market below 200,000 yuan, where fierce competition among automakers continuously squeezes profit margins. From January to November 2025, the industry's profit margin stood at a mere 4.4%, significantly lower than the average for downstream industries.

Regarding production capacity, the shadow of structural overcapacity looms large, exacerbating internal competition within the industry. Moving forward, some fringe new force brands may face a new round of reshuffling.

The policy environment is also set for adjustments in 2026: the purchase tax exemption for new energy vehicles will shift from full exemption to a 50% reduction. Simultaneously, the subsidy for trading in old cars for new ones will transition from a 'fixed amount' to being 'calculated based on the vehicle price ratio,' with a subsidy cap.

Although the maximum subsidy amount remains unchanged, for models priced below 100,000 yuan that dominate sales, the subsidy they can receive has significantly dwindled—from over 10,000 yuan in the past to just a few thousand yuan now.

Against this backdrop, new energy vehicle companies are still setting high growth targets. Are they being overly aggressive or showcasing market resilience?

Don't fret; Chinese automakers still have room for growth.

The Overseas Market Is Expected to Become the Second Growth Engine

While the domestic market enters a stock-based phase, the overseas market still brims with significant potential.

BYD has successfully set a precedent, with its overseas sales surpassing 1 million vehicles for the first time in 2025. Its cumulative annual overseas passenger car and pickup truck sales reached 1,049,601 units, a 145% year-on-year surge.

According to data from the Tianyancha App, Chery's export volume accounted for half of its total sales in 2025.

Most importantly, the Chinese automotive market is arguably the most competitive globally, with constant price wars.

In overseas markets, the competition is relatively less intense, and consumers are not as discerning as Chinese consumers. However, automakers that have been tested in the Chinese market are likely to achieve a 'dimensionality reduction strike' when competing abroad, a term often used to describe a situation where a more advanced or capable entity competes in a less demanding environment, thus easily outperforming competitors.

Moreover, due to the less intense competition, the gross profit per vehicle for Chinese cars overseas will be higher compared to the domestic market.

Taking BYD as an example again, the pricing of its models in the Brazilian market starkly contrasts with that in China. The Song PLUS DM-i is priced at 195,800 reais (approximately 257,400 yuan) in Brazil, while its starting price in China is only 102,800 yuan, more than double in Brazil.

Another model, the flagship version of the Han, is priced at nearly 700,000 yuan in Brazil. In comparison, the top-spec version of the Han L sold in China is priced at 279,800 yuan, nearly a triple price difference.

This gap clearly underscores how popular Chinese models are in overseas markets.

In China, you might casually refer to BYD as 'Didi' without complaint, but overseas, it's 'Big Brother Didi.'

I only realized in the past two years that I used to think Germany was so developed that even taxis were Mercedes-Benz. Now I understand the reality.

Therefore, with Chinese automakers setting a sales target of 30 million vehicles for 2026, they must further expand into overseas markets. We hope more Chinese automotive companies can carve out a niche for themselves abroad.