In April 2025, China’s passenger car market experienced a notable upswing, with sales rising for the third consecutive month. According to the China Passenger Car Association (CPCA), sales increased by 14.8% year-on-year, totaling 1.78 million units. This growth was primarily fueled by the burgeoning demand for new energy vehicles (NEVs), which include electric and plug-in hybrid models.
NEVs Drive Market Growth
NEV sales surged by 33.9% in April, accounting for over half (50.8%) of total car sales for the month. This significant growth is attributed to a government subsidy program that incentivizes consumers to trade in older gasoline vehicles for newer, more environmentally friendly models. As of April 24, the program had supported 2.71 million trade-ins, bolstering domestic demand amid external economic pressures.
Export Challenges Amid Tariffs
Despite robust domestic sales, China’s car exports faced headwinds. Exports declined by 2.2% in April, following an 8% drop in March. These declines are largely due to escalating trade tensions, particularly with the United States, which imposed a 145% tariff on Chinese imports in April. China responded with a 125% retaliatory tariff, further straining export activities.
Regulatory Scrutiny on Autonomous Features
The market’s enthusiasm for autonomous driving features has cooled in recent months. This shift follows increased regulatory scrutiny and safety concerns, including a fatal crash involving Xiaomi’s SU7 sedan in March. In response, the government has cracked down on misleading terminology related to “smart” or “autonomous” capabilities, prompting manufacturers to reassess their marketing and product strategies.
Outlook
China’s automotive industry demonstrates resilience through strong domestic demand, particularly for NEVs, supported by government incentives. However, external challenges such as trade tariffs and declining exports present ongoing obstacles. The industry’s ability to navigate regulatory changes and international trade dynamics will be crucial in maintaining its growth trajectory.
