China’s Passenger Vehicle Inventory Hits 3.43M by End-June, Cycle Up to 62 Days

On July 17, Cui Dongshu, secretary general of CPCA, released the latest industry data showing that China’s passenger vehicle inventory stood at 3.43 million units at the end of June 2026, down 50,000 units from May but up 110,000 units from a year earlier, indicating that inventories remain elevated while gradually stabilizing.

Based on projected retail sales over the next three months, current inventories are sufficient to cover about 62 days of sales.

That compares with 54 days in the same period of 2023 and 55 days in 2024, while remaining slightly below the 63-day level recorded in 2025. Inventory pressure therefore remains relatively high.

Manufacturers accounted for 30.2% of total inventories, a level the CPCA still considers elevated.

According to the CPCA, automakers maintained relatively aggressive production plans earlier this year on expectations of stronger demand, but retail sales failed to meet forecasts, resulting in continued inventory accumulation.

Although manufacturers have recently begun reducing production, inventory digestion is expected to remain challenging in the near term.

China’s auto market has undergone a notable adjustment since last year.

The CPCA said that after the vehicle trade-in subsidy program was introduced in 2025, retail demand temporarily improved, prompting automakers to maintain relatively cautious production and allowing the industry to enter a destocking phase between May and August.

However, market performance has remained weaker than expected since October last year.

Industry inventories climbed to a nearly two-year high in November before manufacturers reduced output to curb stock levels. Even so, inventories at the end of June remained higher than a year earlier.

Retail demand also remained subdued. Passenger vehicle retail sales totaled 1.602 million units in June, down 23% year on year.

Retail sales for the first six months reached about 8.7 million units, a decline of 20% from the same period last year.

With new national vehicle standards set to take effect in July and consumer demand recovering more slowly than expected, automakers further cut production in June.

Passenger vehicle output totaled 2.338 million units during the month, down 2.7% year on year.

In contrast to the domestic market, exports continued to expand. Passenger vehicle exports, including complete vehicles and CKD kits, reached 880,000 units in June, up 82.3% year on year.

Exports accounted for 37% of automakers’ passenger vehicle sales, compared with 19% a year earlier.

Exports have become an important pillar supporting production and sales, helping offset weak domestic demand.

Inventory levels in the new energy vehicle segment also remain under close scrutiny.

At the end of June, inventories held by companies producing only new energy vehicles stood at 790,000 units, unchanged from the previous month and down 10,000 units from a year earlier.

However, the level remains close to the cyclical high recorded in November 2025.

The CPCA said weaker-than-expected NEV retail sales continue to leave both manufacturers and dealers under inventory pressure, with the sector yet to enter a meaningful destocking cycle.

From a longer-term perspective, China’s passenger vehicle inventory fell to a cyclical low of 2.97 million units in October 2024 before entering a new inventory accumulation phase.

The CPCA believes the industry remains in a restocking cycle through 2025 and 2026.

With retail demand recovering slowly and market competition intensifying, inventory pressure is unlikely to ease significantly in the near term.

Market sentiment has also weakened. The CPCA’s forecasting team reported that optimism toward the July market fell to just 19%, the lowest reading in recent months, while June market satisfaction stood at only 37%.

For comparison, vehicle inventory cycles in the U.S. auto market currently average between 40 and 50 days, significantly lower than in China, making the U.S. market an increasingly important benchmark for the domestic industry.