Fixed asset investment in the automobile industry increased by 2.6% year-on-year during the January–February period of 2026, exceeding the overall industry average growth rate of 1.8%. The value-added output of the automobile industry grew by 11.5% in 2025, while the growth moderated to 3.4% in the first two months of 2026. Total automobile production reached 4.02 million units during this period, representing a 10% decline compared to the same period last year. New energy vehicle production stood at 1.6 million units, down 14% year-on-year, with a penetration rate of 40%. Production of traditional fuel vehicles fell by 7% to 2.42 million units.
China’s total retail sales of consumer goods amounted to 8.6079 trillion yuan in January–February 2026, up 2.8% year-on-year. Within this, automotive consumption reached 625.2 billion yuan, a decrease of 7% compared to the prior year. Retail sales of consumer goods excluding automobiles grew by 3.7% to 7.9827 trillion yuan.
The external environment has become increasingly complex and challenging, with rising unilateralism and protectionism undermining the stability of industrial and supply chains. Domestically, the foundation for economic recovery remains unstable, with persistent issues such as insufficient effective demand and lack of market vitality. The task of stabilizing growth in the industry remains difficult.
In 2025, subsidies for passenger vehicle trade-ins were significantly lower than those for commercial vehicles. As a result, commercial vehicle subsidies contributed to stronger retail sales growth, while passenger vehicle sales declined. Currently, passenger vehicle consumption is under considerable pressure. There is an expectation for strong, long-term follow-up policies, including personal income tax reductions for car buyers, promotion of new energy vehicles in rural areas, streamlined licensing procedures for C7-class economy electric vehicles, enhanced tax incentives for compliant pure electric vehicles with ranges under 200 kilometers, and incentives linked to marriage and childbirth to stimulate car purchases and economic growth.
Automobile consumption has shown relatively strong recovery since the downturn in the property market began in 2021. Automotive consumption rose from 3.94 trillion yuan in 2020 to 5.03 trillion yuan in 2024, breaking away from the stagnation seen between 2018 and 2020, when figures hovered around 3.9 trillion yuan. The decline in real estate prices has benefited consumption by alleviating the crowding-out effect of property investment on consumer spending. However, weak consumption remains a concern.
In January–February 2026, automotive consumption fell by 7.3% year-on-year. This decline reflects the high base from 2025 and the impact of policy tightening on sales. Following consecutive increases in the base figure, the drop this year has been more pronounced.
In terms of product categories, among the 626 major industrial products tracked, 397 reported year-on-year production growth in January–February 2026. Automobile production totaled 4.024 million units, down 9.9%. New energy vehicle production reached 1.604 million units, declining by 13.7%. Electricity output increased by 4.1% to 1.5718 trillion kilowatt-hours, while crude oil processing volume rose 2.9% to 122.63 million tons.
The value-added output of the automobile industry remained stable in 2025. Industrial value-added output from large-scale enterprises grew by 5.9% for the full year. In the first two months of 2026, it increased by 6.3% year-on-year, indicating relatively strong industrial economic growth. Historical data show automobile industry value-added growth of 6.6% in 2020, around 5.5% in 2021, 6.3% in 2022, a robust 13% in 2023, 9.1% in 2024, 11.5% in 2025, and 3.4% in January–February 2026, reflecting recent moderation.
Industrial capacity utilization remained steady between 2020 and 2024, fluctuating within a narrow range of 72.4% to 74.6%. In the fourth quarter of 2024, the capacity utilization rate for large-scale industries was 76.2%, up 0.3 percentage points year-on-year and 1.1 percentage points from the third quarter. In the fourth quarter of 2025, it stood at 74.9%, up 0.3 percentage points from the previous quarter but down 1.3 percentage points year-on-year. The full-year 2025 capacity utilization rate was 74.4%. By sector, the automobile industry's capacity utilization rate was 73.2% in 2025, relatively low compared to other major industries.
In February 2026, average daily production of new energy vehicles was 27,000 units, down 13.7% year-on-year. Due to the high base from the previous year, production volatility has been significant in 2026. In the first half of 2025, production was stronger for small and micro electric vehicles, driven by solid demand in the low- to mid-range segments. As a result, sales value growth slightly lagged behind sales volume growth. The sharp reduction in subsidies for small and micro electric vehicles this year has had a considerable impact.
On a daily average basis, automobile production in January–February 2026 was 68,000 units, down 9.9%. Considering the elevated base from January–February 2025 and policy-driven demand contraction at the end of 2025, growth performance in the first two months of this year has been weak.
Historical production figures are as follows: In 2022, automobile production reached 27.48 million units, up 3% year-on-year; new energy vehicle production was 7.22 million units, surging 98%, with a penetration rate of 26%; fuel vehicle production fell 11% to 20.26 million units. In 2023, automobile production increased 9% to 30.11 million units; new energy vehicle output grew 30% to 9.44 million units, with a 31% penetration rate; fuel vehicle production rose 2% to 20.67 million units. In 2024, automobile production reached 31.56 million units, up 5% year-on-year; new energy vehicle production jumped 39% to 13.17 million units, achieving a 42% penetration rate; fuel vehicle production declined 11% to 18.39 million units. In 2025, automobile production totaled 34.78 million units, up 10% year-on-year; new energy vehicle production increased 25% to 16.52 million units, with a 48% penetration rate; fuel vehicle production edged down 1% to 18.25 million units.
Fixed asset investment in the automobile sector grew steadily in 2026. National fixed asset investment (excluding rural households) reached 48.5186 trillion yuan in 2025, down 3.8% from the previous year. In January–February 2026, it amounted to 5.2721 trillion yuan, up 1.8% year-on-year. Investment in the automobile industry during the same period grew by 2.6%, outperforming the overall industry average.
The decline in housing prices has had a noticeable positive effect on automobile market consumption. In January–February 2026, sales area of newly built commercial housing fell 13.5% year-on-year to 92.93 million square meters, with the decline widening by 4.8 percentage points compared to the full year 2025. Residential sales area dropped 15.9%. Sales value of newly built commercial housing decreased 20.2% to 818.6 billion yuan, with the decline widening by 7.6 percentage points. Residential sales value fell 21.8%. The average price of commercial housing in January–February 2026 was 8,809 yuan per square meter, remaining at a historically high level, which is unfavorable for consumption. As of February 2026, the average commercial housing price was 8,809 yuan per square meter, not far below the peak of 11,030 yuan per square meter in 2021.
Real estate loans tie up substantial capital, and property market investment relies heavily on down payments and advance payments from households, which diverts funds away from automobile purchases. The booming property market between 2016 and 2019 significantly suppressed consumption, but its subsequent cooling has benefited the auto market. However, with housing prices still elevated—particularly in eastern regions, where sales values are falling rapidly—high-end consumption in real estate is being squeezed. Current household income levels cannot sustain high debt loads, so a cooling property market is conducive to boosting auto sales.
From a real estate perspective, high housing prices reflect shrinking demand and a sharp decline in sales volume, while lower prices are key to stimulating growth. In 2021, revenue from land transfer fees amounted to 8.7051 trillion yuan, accounting for 48% of real estate sales value. This share rose to 50% in 2023, with land transfer revenue of 5.7996 trillion yuan. In 2024, land transfer income was 4.8699 trillion yuan, also representing 50% of property sales revenue, underscoring real estate’s significant contribution to local government finances. In 2025, land sales revenue still accounted for 49% of housing prices.
Currently, the ratio of housing sales area to automobile sales volume in January–February 2026 is 23 square meters of housing per vehicle, indicating some improvement in the previously unbalanced relationship. Although this is better than the peak ratio of 70 square meters per vehicle in 2020, lingering debt pressure and high housing prices continue to suppress consumption, keeping auto demand subdued due to debt burdens. The wealth effect from the property market has supported demand for high-end vehicles to some extent. Recently, reduced household debt pressure and weaker homebuying demand have created potential benefits for auto market consumption.
Sustained policy support is needed for the auto market in 2026. Since the property market downturn began in 2021, automotive consumption has risen from 3.94 trillion yuan in 2020 to 4.98 trillion yuan in 2025, breaking free from the three-year stagnation around 3.9 trillion yuan between 2018 and 2020. The decline in real estate has helped consumption by reducing the crowding-out effect of property investment. However, with auto consumption down 7% year-on-year in January–February 2026, weak consumption remains an issue.
In 2025, total retail sales of consumer goods reached 50.1202 trillion yuan, up 3.7% year-on-year. Automotive consumption accounted for 4.9789 trillion yuan, down 2%, while retail sales excluding automobiles grew 4.4% to 45.1413 trillion yuan. In recent years, refined oil consumption has shown relative negative growth. As prices have fallen, consumption value has gradually declined, reflecting the positive pull of automobile consumption.
Within overall retail sales, growth in retail sales of goods from enterprises above a designated size has been relatively weak, highlighting the significant impact of real estate on consumption. The property market continues to exert a noticeable restraining effect on major consumer spending categories.