China Auto Sector Profit Margin Falls to 3.9% in October as Pressure Mounts

In Oct, automotive industry revenue reached RMB 1,054.3 billion ($147.6 billion), with profits of RMB 41.2 billion ($5.77 billion), representing a profit margin of 3.9%, a significant decline from Sept.

On November 27, Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), released updated sales and profit data for the automotive industry for October.

Overall production and sales remained on an upward trajectory, but profit pressure intensified, with profitability sitting near a short-term low.

Data shows that automotive production in October reached 3.28 million units, up 11% year-on-year (YoY). Industry operating revenue totaled RMB 1,054.3 billion ($147.6 billion), up 8.6% YoY; total cost reached RMB 937.6 billion ($131.3 billion), up 9.4%; and profit reached RMB 41.2 billion ($5.77 billion), up 13.7%.

Although profit volume increased, the profit margin narrowed to 3.9%, a notable drop from September and below the 4.1% recorded a year earlier.

From January to October, policy support continued to play a role. Driven by “two new” policy measures, the development of a unified national market, and last year’s low comparison base, cumulative production reached 27.33 million units, up 11% year-on-year.

During the same period, industry revenue reached RMB 8,877.8 billion ($1,242.89 billion), up 7.9%; costs reached RMB 7,824.3 billion ($1,095.40 billion), up 8.7%; profits reached RMB 389.5 billion ($54.53 billion), up 4.4%, resulting in a 4.4% margin—well below the 6% average for downstream industrial sectors.

Based on per-vehicle economics, the industry generated approximately RMB 321,000 ($44,940) in revenue and RMB 13,000 ($1,836) in gross profit per vehicle in October, down from RMB 14,000 ($1,978) gross profit in September.

For the January–October period, average per-vehicle revenue stood at RMB 325,000 ($45,500), with gross profit of RMB 14,000 ($1,960).

With industry scale still expanding, price competition intensifying, and PPI declines transmitting structural cost pressure, automakers’ profitability is unlikely to improve significantly in the short term.

The widening price advantage of new-energy vehicles is also increasing pressure on mainstream automakers in the ongoing price war.

The strategy of exchanging price for volume continues to strengthen, further compressing margin space. While more regions have rolled out aggressive trade-in incentives, the improvement in automotive profitability lags behind other consumer categories.

Cui believes that as national anti-involution policies advance and regulatory adjustments such as fuel-EV price parity proceed, competition will gradually normalize and profit distribution across the supply chain may rebalance.

Short-term pain persists, but expectations for medium- to long-term improvement remain broadly positive.