(July 8): China’s passenger-car market contracted again in June, with data showing a widening split between domestic demand and surging overseas shipments.
Retail sales of passenger vehicles fell 23.2% from the year before to 1.6 million units, China’s Passenger Car Association said on Wednesday. New-energy vehicle sales, including plug-in hybrids and pure-electric vehicles, slipped 9% year-over-year, though the segment still accounted for over 60% of the market for a third straight month.
Manufacturers leaned heavily on exports to offset the slowdown. Exports of new-energy vehicles surged over 150% to 499,000 units, signalling that foreign markets are absorbing excess production. Despite a one-fifth drop in domestic sales, BYD Co’s total shipments rose 5.5%, driven by exports that almost doubled from a year ago.
Amid the broader domestic deceleration, Tesla Inc posted one of the month’s strongest performances. The Austin, Texas-based automaker delivered 89,091 vehicles from its Shanghai factory in June, including 52,920 sold locally. That extended Tesla’s year-on-year growth streak in China to eight months and marked its best monthly total of the year.
The latest figures highlight a widening pressure on weaker brands. Zeekr crossed the halfway mark toward its annual sales target, while Xpeng Inc fell significantly behind initial projections following a pullback in first-half deliveries.
The industry now enters the second half of the year under immense pressure, while the domestic auto market is increasingly defined by intense competition in a mature, replacement-driven market, according to the PCA statement.
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“Internal polarisation across the sector continues to widen,” said Cui Dongshu, secretary general of the association, while warning that both costs and margins are under severe pressure, squeezed by skyrocketing automotive-grade chip prices and speculative bidding for lithium carbonate.
While the association lowered its 2026 retail sales growth forecast to a 14% contraction in mid-June, the group expects market sentiment to steadily turn a corner after July.
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