A Series of Policy Initiatives Roll Out

In the first half of 2026, despite the introduction of hundreds of new car models, sales figures remained lackluster.

Data recently released by the China Association of Automobile Manufacturers (CAAM) revealed that passenger car sales in the first half of 2026 reached 8.288 million units, marking a 24.3% year-on-year decline. Specifically, domestic sales of traditional fuel passenger cars stood at 3.694 million units, down by 1.732 million units or 31.9% year-on-year. Meanwhile, domestic sales of new energy vehicles (NEVs) reached 5.09 million units, a 13.4% decrease from the previous year.

At the China Automotive Industry High-Quality Development Summit Forum on July 13, Chen Shihua, Deputy Secretary-General of the CAAM, pointed out that the automotive industry is currently grappling with several challenges, including historically low-profit margins in automotive manufacturing, with the profit margin for complete vehicle manufacturing hovering at just 1.5%.

More seriously, financial forecasts from several listed car companies for the first half of the year indicate a widespread trend of revenue growth without corresponding profit increases, and in some cases, significant losses, even among brands that have achieved record sales.

The overall automotive market is under pressure, and price wars are no longer sustainable. However, over the past two months, multiple departments have introduced a series of 'stimulus' policy measures aimed at boosting automobile consumption.

These measures range from national subsidies and reforms in the automobile circulation system to expanding and improving the aftermarket, optimizing vehicle registration processes, promoting NEVs in rural areas, and upgrading mandatory national standards for power battery safety. Unlike previous short-term stimulus models that relied solely on car purchase subsidies, a long-term policy framework for promoting consumption that covers the entire lifecycle of vehicles and addresses both supply and demand is gradually taking shape.

Sales Fall Short of Expectations

The chill in the automobile market has been evident since the beginning of the year. Despite the launch of nearly 600 new models, including facelifts, in the first half of the year, sales failed to pick up.

Among traditional car companies, domestic brands continue to lead the way. BYD sold a cumulative total of 1.8085 million units in the first half of the year, with monthly sales exceeding 400,000 units in June. Geely Auto achieved a record high for the same period with cumulative sales of 1.423 million units, and monthly sales reaching 240,800 units in June, marking four consecutive months of year-on-year and month-on-month growth. Chery Group also set a record high for the same period with cumulative sales of 1.3575 million new vehicles, a 7.7% year-on-year increase. Great Wall Motors sold a cumulative total of 583,900 units, a 2.48% year-on-year increase.

The ranking of new energy vehicle startups (new forces) has undergone significant changes in the first half of the year. Leapmotor delivered a cumulative total of 356,400 units, taking the lead among new forces. Hongmeng Zhixing delivered approximately 240,000 units across its entire lineup in the first half of the year, with cumulative deliveries exceeding 1.43 million units as of June. Zeekr delivered 178,300 units, a 97% year-on-year increase.

The decline of joint venture brands has become increasingly apparent, with their market share continuing to slide under the dual pressures of electrification transformation and price wars. CAAM data shows that in June, sales of Chinese brand passenger cars reached 1.812 million units, a 6.2% year-on-year increase, with a market share of 75.5%, up 8.2 percentage points year-on-year. This contrast highlights the plight of joint venture brands.

According to statistics from the China Passenger Car Association (CPCA), FAW-Volkswagen's retail sales in the first half of the year were 558,000 units, a 25% year-on-year decrease. SAIC Volkswagen sold 381,000 units, a 27.2% decrease. GAC Toyota sold 341,000 units, a 6.3% decrease. FAW Toyota sold 274,000 units, a 27.4% decrease. Nissan China reported that Dongfeng Nissan (including Nissan, Venucia, and Infiniti brands) sold a cumulative total of over 200,000 units in the first half of the year, a 12% year-on-year decrease. GAC Group's production and sales bulletin shows that GAC Honda sold only 68,000 units in the first half of the year, a 55.82% year-on-year decrease.

Among the companies surveyed by China Automotive News, only Zeekr has achieved a year-to-date sales target completion rate exceeding 50%, with the rest below 45%. Among them, those with a target completion rate exceeding 40% include China FAW Group, SAIC Motor, Chery Group, Geely Holding, Li Auto, and NIO. Those exceeding 35% include GAC Group, China Changan Automobile Group, BAIC Group, BYD, and Leapmotor. Xiaomi Auto, Great Wall Motors, Dongfeng Motor Group, and XPENG Motors have a sales completion rate of around 30% for the first half of the year.

Although car companies considered market changes and competitive dynamics when setting their targets at the beginning of the year, it is clear that they were still overly optimistic.

Data released by the National Bureau of Statistics on July 15 showed that consumer spending on automobiles decreased by 12.6% year-on-year to 1.97 trillion yuan, the largest decline among all consumer goods. The proportion of automobile consumption in total retail sales of consumer goods also fell from the usual 10% to 7.9%.

A Series of Policy Initiatives Roll Out

The current automobile market is trapped in a vicious cycle where the increasing number of new car launches is driving down sales of various models, including popular ones. In the first half of 2026, the Geely Xingyuan was the top-selling passenger car model with cumulative sales of 194,159 units. In contrast, during the same period in 2016, the top-selling model was the Wuling Hongguang, with cumulative sales of 294,313 units. The sales gap between the top-selling models over the past decade has reached 100,000 units.

This has resulted in car companies being unable to gradually dilute their R&D costs through economies of scale, leading to decreasing profits.

On July 12, Seres released its performance forecast, indicating a net loss attributable to the parent company of 1.5 billion to 1.8 billion yuan in the first half of the year, compared to a net profit of 2.941 billion yuan in the same period last year, a significant year-on-year decrease. JAC Motors expects a net loss attributable to the parent company of 773 million yuan in the first half of the year, compared to a net loss of approximately 740 million yuan in the same period last year. GAC Group expects a net loss attributable to the parent company of 4.06 billion to 4.57 billion yuan, compared to a loss of 2.538 billion yuan in the same period last year. BAIC BluePark expects a net loss attributable to the parent company of 1.77 billion to 1.97 billion yuan, compared to a loss of 2.308 billion yuan in the same period last year. Great Wall Motors expects its net profit attributable to the parent company for the first half of the year to be between 2.350 billion and 2.600 billion yuan, a 58.97% to 62.92% year-on-year decrease.

The core reasons for the losses, as summarized in car company announcements, are 'intensified market competition' and 'rising raw material costs.' According to data released by Cui Dongshu, Secretary-General of the CPCA, from January to May 2026, revenue in the automotive industry increased by 1.4% year-on-year, while costs increased by 2.3%, higher than revenue growth, leading to a 20% year-on-year decrease in profits.

At the Chongqing Auto Forum held in June, William Li, founder of NIO, stated that this year's domestic passenger car market is the most challenging development stage he has encountered in his career, officially entering the most brutal elimination phase of the 'final round.'

Meanwhile, more comprehensive policy support measures have begun to be implemented.

On June 18, five departments, including the Ministry of Industry and Information Technology and the Ministry of Commerce, officially launched the 2026 New Energy Vehicles Go Rural special campaign. A total of 155 models were included in the recommended list, representing a significant expansion in the product matrix compared to the previous year, covering the full price range from 30,000 to 250,000 yuan. A notable change is that while there were volume limits and coupon-grabbing mechanisms for rural subsidies in previous years, there are no caps on eligibility this year, and eligible individuals can apply for basic rural subsidies.

On June 23, the Ministry of Commerce issued two core industry documents on the same day. It announced a list of 40 pilot cities for automobile circulation and consumption reform in conjunction with eight departments and issued the Notice on Several Measures to Cultivate and Expand the Automobile Aftermarket Consumption in conjunction with nine departments. The two documents form policy synergy, clearly signaling a policy direction—to extend automobile consumption from a single car purchase transaction to cover consumption scenarios throughout the vehicle's entire lifecycle. The aim of the two documents is to comprehensively activate consumption at the vehicle usage end, with the policy focus shifting from 'stimulating new car purchases' to 'revitalizing the trillion-yuan consumption in the existing automobile aftermarket.'

On July 13, the State Council officially approved and issued the '15th Five-Year Plan' for Expanding Consumption, clarifying the thinking, goals, key tasks, and policy measures for the development of the consumption sector during the '15th Five-Year Plan' period. The '15th Five-Year Plan' for Expanding Consumption positions automobile consumption as a core driver for expanding domestic demand, marking a shift in automobile consumption promotion from short-term subsidy stimuli to long-term institutional building.

From this, it is evident that the recently introduced policies no longer focus solely on subsidy stimuli but instead emphasize multi-scenario consumption and long-term governance in the automotive industry, guiding the industry back to a rational development track. Cui Dongshu stated that the core logic behind the national policies to promote automobile consumption is also to move away from pulsed stimuli such as one-time consumption vouchers and short-term tax reductions, and instead form a stable policy environment for the '15th Five-Year Plan' period through systemic reforms in standards, taxation, circulation, and infrastructure, avoiding demand overdraft and market volatility.

This article is original to China Automotive News. We welcome sharing among friends. If media outlets wish to reprint it, please indicate the author and source at the beginning of the article. Any media or self-media is prohibited from using any content from this article to create video or audio scripts. Violators will bear legal responsibility.