China NEV Retail Sales Fall 13% in Early May Despite Sequential Recovery

Takeaways by AI

China NEV retail sales fell 13% year-on-year in early May despite a 27% sequential rebound.
NEVs now account for 55.5% of retail sales but wholesale penetration of 60.3% signals inventory push.
Automakers face shrinking ICE production, rising hybrid output, expanding discounts, and intensifying NEV competition.

Latest data from CPCA showed that nationwide passenger vehicle retail sales totaled 407,000 units during May 1–10, down 21% year-on-year but up 36% compared with the same period in April.

Cumulative retail sales this year reached 6.012 million units, down 19% year-on-year.

From a market trend perspective, the sector is showing a typical pattern of sequential recovery combined with persistent year-on-year pressure.

During the first week of May, average daily passenger vehicle retail sales stood at only 31,000 units nationwide, recovering to 51,000 units in the second week.

Although showroom traffic improved after the May Day holiday, overall end-market consumer demand remained relatively weak.

Bar chart comparing sales volumes for three years (2024, 2025, 2026) across various time periods in May, with percentage changes indicated. — Weekly sales volume and growth rates for the years 2024, 2025, and 2026

Over the same period, nationwide passenger vehicle wholesale volume reached 320,000 units, down 23% year-on-year and up only 7% month-on-month. Year-to-date wholesale volume totaled 8.297 million units, down 7%.

Average daily wholesale volume was only 19,000 units during the first week before recovering to 45,000 units in the second week.

Automakers are still facing considerable pressure in balancing dealer inventory, retail discounts and production scheduling.

New energy vehicles remained the market’s primary growth driver.

A bar chart displaying the sales volumes and growth comparisons of major factories for the months of May in the years 2024, 2025, and 2026. The chart includes labeled sections for different date ranges and shows both numerical data and percentage changes. — Weekly wholesales volume and growth rates for the years 2024, 2025, and 2026

During the first 10 days of May, nationwide retail sales of new energy passenger vehicles reached 226,000 units, down 13% year-on-year but up 27% sequentially, with penetration reaching 55.5%.

Over the same period, wholesale volume of new energy passenger vehicles reached 193,000 units, with penetration climbing to 60.3%, higher than at the retail level.

This suggests some automakers are still pushing inventory into dealer channels in preparation for future sales targets.

On a cumulative basis, NEV retail sales this year reached 2.984 million units, down 17% year-on-year, while cumulative wholesale volume reached 4.147 million units, down 2%.

China’s NEV market is also beginning to enter a slower-growth phase overall.

A crowded automotive exhibition featuring various car models, including a green sports car in the foreground and a pink car nearby. Attendees are gathered around, examining the vehicles, while security personnel are present. — Beijing Auto Show 2026

From the production side, ICE vehicle capacity continues to contract, while HEVs and PHEVs are increasingly becoming an important buffer supporting automakers’ sales performance.

During the first two weeks of May, production of conventional fuel-powered light vehicles reached 143,000 units, down 42% year-on-year and down 35% compared with the previous month.

Over the same period, production of hybrid and plug-in hybrid vehicles reached 104,000 units, down 12% year-on-year but flat month-on-month.

Many automakers have already entered mid-year promotional campaigns ahead of schedule, with retail discounts expanding again.

In the new energy vehicle market in particular, competition is likely to intensify further in the coming weeks as more new models launch and advanced intelligent driving and plug-in hybrid technologies continue moving into lower price segments.