China's passenger vehicle market posts YoY drop in Jan. 2025 retail sales, wholesales, but exports still up

Shanghai (Gagsoo)- In January 2025, China's passenger vehicle (PV) retail sales totaled 1.794 million units, marking a 12.1% year-on-year decline and a 31.9% month-on-month drop, according to data from the China Passenger Car Association ("CPCA"). This places January's sales at a historically low level, with the month-on-month decline second only to the 41% drop recorded in January 2023.

The weaker demand can be attributed to multiple factors, said the CPCA. The La Niña phenomenon brought warmer and drier conditions to eastern China this winter, reducing the need for vehicle use. Additionally, while China's vehicle scrappage and replacement subsidy policies from 2024 remain in effect, the termination of the annual policy cycle led many consumers to complete their purchases by late 2024 in anticipation of the earlier Chinese New Year. As a result, January 2025's market lacked the usual pre-holiday surge. The shorter effective sales period, with more than four fewer selling days, also contributed to the decline.

Historically, the period leading up to the Chinese New Year holiday is characterized by lower production and wholesale volumes, as automakers focus on clearing inventory while retailers experience peak demand. However, given the high sales base of January 2024, some manufacturers, after meeting their 2024 targets, strategically shifted sales volume to January 2025 to ensure a strong start to the new year, in line with regional economic stability goals.

In January 2025, China's wholly-owned PV brands recorded 1.09 million units in retail sales, down 2% year-on-year and 33% month-on-month. However, their market share expanded to 61%, a 5.9-percentage-point increase compared to the year-ago period.

Meanwhile, mainstream joint-venture brands faced steeper declines, with their retail sales sliding 27% year-on-year and 30% month-on-month to 490,000 units. German brands held an 18.4% market share by retail sales, down 0.7 percentage points, while Japanese brands' market share declined 3.3 percentage points from the prior-year period to 13.4%, and American brands' share fell 1.1 percentage points over a year earlier to 5.3%.

The premium PV segment also struggled, with around 210,000 units retailed in January, down 15% year-on-year and 28% month-on-month. Despite this, traditional premium vehicle brands performed relatively well, with their overall market share slipping 0.4 percentage points to 11.6%.

Among automakers in China, Geely Auto overtook BYD by January retail sales of locally-made PVs, securing the top position with 240,000 vehicles sold, representing a 28.2% year-on-year jump and a 13.4% market share. BYD ranked second with 220,000 units retailed, marking a 3.2% decline and an 11.2% market share. FAW-Volkswagen, Changan Auto, and Chery Automobile ranked third to fifth. Of the top ten manufacturers, eight recorded year-on-year declines.

On the wholesale front, China's PV manufacturers reported a combined sales volume of 2.101 million vehicles in January, a 0.3% year-on-year decrease and a 31.6% month-on-month drop.

Regarding the January wholesale volume of domestically built PVs, China's wholly-owned brands held a 69% share, up 8 percentage points year-on-year, driven by strong growth in the new energy vehicle (NEV) and export segments. They led the market with 1.445 million vehicles sold, up 14% year-on-year, but down 29% month-on-month.

In the same period, joint ventures saw their combined PV wholesales drop 24% over a year ago to 440,000 units, while premium vehicle brands fell 19% from the year-ago period to 220,000 units.

Performance among leading automakers varied. In January, five automakers in China surpassed 100,000 units in PV wholesales, accounting for 53% of total market share. Of the 33 carmakers exceeding 10,000 units of wholesales, five recorded over 10% month-on-month growth.

In terms of production, China's PV output reached 2.107 million units in January, up 3.6% year-on-year but down 28.2% month-on-month. While production fell 190,000 units short of the 2018 record of 2.3 million, the numbers remained strong considering the Chinese New Year factor, contributing significantly to regional economic stability.

In January, China's premium PV production declined 17% year-on-year, while joint ventures faced a decline of 13% over the previous year, whereas China's self-owned brands increased output by 16% from a year ago.

On the export front, China's PV exports (including both complete vehicles and completely knocked-down kits) continued their strong momentum, reaching 380,000 units in January, a 3% year-on-year increase, though down 6% from December 2024. NEVs accounted for 35.9% of total exports, up 7.5 percentage points from the previous year.

In January, China's wholly-owned brands dominated the export sector with a volume of 328,000 vehicles, an 8% increase year-on-year, while joint-venture and premium vehicle brands exported 60,000 units in total, down 19% year-on-year.

February 2025 has 19 working days, one more than the same month last year, with most pre-holiday leave concentrated in January. As market competition intensifies, automakers are accelerating post-holiday production and operations, leading to significant recovery potential for February's auto market.

With the gradual rollout of vehicle trade-in policies in certain regions, the automotive industry has entered a post-holiday rebound phase. However, since January's policy transition period provided stronger subsidies, February's sales will primarily rely on intrinsic market demand rather than policy-driven incentives.

The CPCA forecasts that the China's PV market will experience steady growth in February, with NEVs remaining the key driver, while traditional oil-fueled vehicle sales continue to decline. The association emphasizes that policy support, technological advancements, and consumer upgrades will be crucial in shaping market trends. Additionally, reducing discriminatory policies against oil-fueled vehicles and ensuring balanced development between gasoline and NEV models could help stabilize both domestic and international auto sales.