China’s auto sales fall at fastest pace in nearly two years in January

Published Wed, Feb 11, 2026 · 05:42 PM

[BEIJING] China’s car sales in January fell at the fastest pace in nearly two years. This comes as the competition steepens in the cut-throat market, where automakers are grappling with fading government subsidies, softening demand and tighter regulations.

The sales at home dropped 19.5 per cent from the year before to 1.4 million vehicles, the biggest fall since February 2024, data from the China Association of Automobile Manufacturers showed on Wednesday (Feb 11).

The retail sales of electric cars and plug-in hybrids, a sector known as new energy vehicles (NEV), fell 22.9 per cent in January. It had previously been outpacing the overall market.

Due to the shifting timing of the week-long Chinese New Year holiday, wide fluctuations in China’s car sales in the first two months of the year are common, as purchases are often made beforehand.

This year, the holiday begins in mid-February versus in late January last year, underscoring the depth of the poor market conditions at the start of this year.

A revised government trade-in policy has curtailed subsidies for lower-priced cars that make up the bulk of new car sales, setting the stage for expected flat growth this year in the world’s largest auto market.

At a symposium with car companies on Friday, Vice-Commerce Minister Sheng Qiuping pledged to optimise the trade-in policy implementation as part of the efforts to spur auto sales.

Subsidised auto trade-ins exceeded 11.5 million vehicles in 2025, accounting for nearly half the total vehicle sales, official data showed.

Chinese electric vehicle (EV) champion BYD’s sales were hit particularly hard in January, falling 30 per cent, which is higher than the industry average.

Automakers in China, jostling to lure frugal customers strained by a prolonged housing downturn and weak job market, are extending repayment terms to as long as eight years.

The carmakers are also under pressure to align with redesign requirements, as China moved to tighten EV regulations in the wake of some high-profile accidents in 2025.

The country announced a ban on “hidden” car door handles from 2027, such as those popularised by Tesla, and is considering limits on EV acceleration.

The NEV exports more than doubled, however, offsetting flagging domestic sales as local automakers increasingly look to overseas markets to drive growth.

BYD, whose overseas shipments made up nearly half of its global sales in January, aims to become Brazil’s top carmaker by 2030.

Hangzhou-based manufacturer Geely is in talks with Ford to use the US automaker’s factory space in Europe to make cars for the region, it was reported on Feb 4. REUTERS