- Additional vehicle purchase tax costs kicking in and the transition of trade-in subsidies are putting pressure on NEV sales at the start of the year.
- From January 1 to 11, China's total passenger vehicle retail sales came in at 328,000 units, down 32% year-on-year.
China's new energy vehicle (NEV) retail sales saw a significant decline in early January as additional vehicle purchase tax costs took effect and trade-in subsidies had yet to provide support.
From January 1-11, China's passenger NEV retail sales came in at 117,000 units, down 38% year-on-year and down 67% month-on-month, according to data released Wednesday by the China Passenger Car Association (CPCA).
Wholesale sales of Chinese passenger NEVs from January 1-11 totaled 167,000 units, down 30% year-on-year and down 51% month-on-month.
From January 1-11, total passenger vehicle retail sales in China were 328,000 units, down 32% year-on-year and down 42% month-on-month.
This indicates that NEVs accounted for 35.67% of China's passenger vehicle retail market during the January 1-11 period.
For years, China exempted NEV purchases from the standard 10% vehicle purchase tax.
From 2026-2027, this support will transition to a smaller 50% reduction, meaning NEV buyers will pay 5% purchase tax starting this year.
Additionally, China's previous trade-in incentive program began phasing out last November. A policy update released December 30 indicates the subsidy will continue in 2026.
CPCA said in its Wednesday report that January's weaker retail sales are normal following the expiration of the vehicle purchase tax exemption policy.
The market will gradually improve as local governments finalize trade-in subsidy details and activate subsidy channels, the CPCA said.
From January 1-11, China's daily average passenger vehicle retail sales were 29,818 units.
During the same period, total passenger vehicle wholesale sales in China amounted to 381,000 units, down 40% year-on-year and down 30% month-on-month.
From January 1 to 11, China's daily average wholesale sales of passenger vehicles were 34,645 units.
