- China’s auto industry swung to sharply lower profitability in September as costs outpaced modest revenue growth, reflecting sector-wide price pressure and rising input costs squeezing margins.
- September sales margin hit 1.4% with RMB 1.0374 trillion revenue, RMB 925.7 billion costs, and RMB 14.2 billion profit; Jan–Sep revenue RMB 8.0435 trillion, profit RMB 267.5 billion.
- NEVs accounted for 12.46 million units Jan–Sep (53% of output), pressuring legacy ICE volumes; execution risks include surging raw material costs, supply squeezes, and margin dilution across scaling efforts.
China’s automotive industry generated revenue of RMB 1.0374 trillion ($155.6 billion) in September 2026, up 0.6% year on year, according to data released on October 27 by Cui Dongshu, secretary-general of CPCA.
Costs reached RMB 925.7 billion ($138.8 billion), up 2.5% from a year earlier.
With revenue growth lagging well behind cost increases, industry profit fell 68% year on year to RMB 14.2 billion ($2.13 billion), bringing the sales margin down to 1.4%.
The margin was below both the 4.4% recorded in September 2025 and the 4% reported in August this year.
It also fell below the previous monthly low of 1.8%, recorded in December 2025, reaching its lowest level in nearly four years.
China produced 3.06 million vehicles in September. Revenue continued to grow, but profits contracted sharply, indicating that pressure on the industry extends beyond vehicle sales to cost control and profitability.
In the first nine months of 2026, the automotive industry produced 23.37 million vehicles, down 4% year on year, while revenue rose 2.6% to RMB 8.0435 trillion ($1.206 trillion).
Profit, however, fell 23% to RMB 267.5 billion ($40.1 billion), leaving the sales margin at 3.3%.
By powertrain, cumulative new energy vehicle (NEV) production reached 12.46 million units in January–September, up 12% year on year, accounting for 53% of total vehicle output.
Production of internal combustion engine vehicles fell 17% to 10.92 million units.
NEVs have become the main source of growth in China’s vehicle production, but the industry’s overall profitability has not improved in tandem.
Rising costs are one key factor. Across the automotive industry chain, revenue per vehicle averaged approximately RMB 344,000 ($51,586) in the first nine months, up 5.8% year on year.
Cost per vehicle reached RMB 305,000 ($45,738), an increase of 7%, while taxes and fees averaged around RMB 26,000 ($3,899) per vehicle, up 7.2%.
With both costs and taxes rising faster than revenue, gross profit per vehicle across the industry chain fell 21% year on year to approximately RMB 11,000 ($1,650).
Higher prices for raw materials and key components have added to the pressure on margins.
Data cited by Cui showed a sharp surge in memory prices, lithium carbonate prices doubling from previous levels, and bulk commodity prices remaining elevated, increasing procurement costs for companies further down the supply chain.
The automotive industry’s profitability also lagged behind that of several other industrial sectors.
From January to September 2026, profits at downstream industrial companies rose 22% year on year.
Meanwhile, profits in the computer, communications and other electronic equipment manufacturing sector increased 104%.
By comparison, automotive industry profits declined 23%, and its 3.3% sales margin remained well below the 6.7% margin across downstream industries overall.
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