- China auto profit margin collapses to 3.2% in Q1 as industry profits plunge 18% to ¥78.4B.
- Per-vehicle gross profit falls 13.2% to ¥11K as costs (+6.3%) outpace revenue (+5.4%).
- Production down 6% with sedans -22% while NEV penetration holds at 42% but growth slows.
Cui Dongshu, Secretary-General of the China Passenger Car Association (CPCA), released the China automotive industry profit report for January-March.
Data shows that in the first quarter, automobile production reached 7.15 million units, down 6% year-on-year; industry revenue totaled 2,412.8 billion yuan, down slightly by 0.2% year-on-year; costs stood at 2,140.6 billion yuan, up 0.7% year-on-year; while profit was only 78.4 billion yuan, plunging 18% year-on-year.
More notably, the automotive industry’s sales profit margin further dropped to 3.2%, hitting a historic low. Although the single-month profit margin in March rebounded to 3.7%, outperforming the 2.9% recorded in January-February, the overall situation remains at an industry trough.
Compared with the average 6% profit margin of downstream industrial enterprises, the profitability of the automotive industry is significantly weaker, and even far below the 9% profit margin level seen in 2014.
Looking at per-vehicle economic indicators, the overall revenue per unit across the auto industry chain hit 337K RMB ($47K) in Q1, up 5.4% year-on-year. During the same period, per-vehicle costs rose 6.3% to 299K RMB ($42K), while taxes and fees added 27K RMB ($3.8K), a 3.9% increase. Consequently, the industry chain’s per-vehicle gross profit slid 13.2% to just 11K RMB ($1.5K).
These figures reveal a stark reality: the cost increase (6.3%) significantly outpaced the revenue growth (5.4%), and coupled with rising taxes and fees, the per-vehicle profit margin has been continuously squeezed.
Specifically, in the first quarter of 2026, profit differentiation across industrial sectors was extremely pronounced. Mining industry profits grew 16% year-on-year, with the profit margin maintained at a high of 19.9%. Among them, the non-ferrous metal mining and dressing industry saw a profit margin as high as 39.1%, while the oil and natural gas extraction industry reached 32.9%.
The surge in upstream raw material prices has directly created massive cost shocks for downstream manufacturing industries.
In the first quarter, overall downstream industrial profits grew by 15%, yet automotive manufacturing profits declined by 18%, making it an “outlier” among downstream industries. In contrast, other downstream sectors such as tobacco, alcohol, and pharmaceuticals maintained profit margins at high levels of 12%-17%, while the computer, communication, and electronic equipment industry saw an abnormal profit growth of 125%.
The automotive industry’s 3.2% profit margin not only falls below the downstream average of 6%, but also lags significantly behind comparable consumer goods industries.
Looking at the automotive industry’s production structure in the first quarter.
The overall automobile market showed a contraction trend, with total production in the first quarter at 7.15 million units, down 6% year-on-year.
Among them, sedan production was 2.27 million units, plummeting 22% year-on-year; SUVs bucked the trend with growth, reaching 3.4 million units, up 6% year-on-year; new energy vehicle (NEV) penetration remained stable, with production at 3.02 million units, down slightly by 6% year-on-year; in contrast, fuel-powered vehicles continued to shrink, with production at 4.13 million units, down 5% year-on-year.
Worth mentioning is that NEV penetration maintained a high level of 42%, but the growth rate has clearly slowed (compared to 25% growth in the same period last year), indicating that the new energy vehicle market has shifted from high-speed growth to a stage of stock competition.
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