Domestic vehicle sales up as tax change looms

Chinese automakers notched monthly sales records in October, fueled by favorable policy incentives and a rebound in consumer demand, propelling China's auto market toward a robust year-end performance.

Industry experts pointed out that the robust market performance is primarily driven by the upcoming adjustment to the new energy vehicle purchase tax. Starting on Jan 1, 2026, the tax policy will shift from full exemption to 50 percent, with a per-vehicle cap of 15,000 yuan ($2,105).

The tax, which is 10 percent of the vehicle price, has been fully exempt for NEVs for over a decade.

This policy adjustment has prompted a large number of consumers to purchase cars before the end of the year to lock in the preferential treatment, the experts said.

Meanwhile, uncertainties about whether the 2025-expiring trade-in policy will be upgraded and extended have hastened consumer decision-making, the experts added.

During the policy transition period, local governments and automakers have rolled out subsidies.

Guangdong announced consumption vouchers from November 2025 to March 2026, including a subsidy for NEV purchases or fuel-powered cars meeting National VI emission standards.

Several automakers including Zeekr, Xiaomi, Nio, and IM Motors have launched subsidy programs to cover the purchase tax difference — up to a maximum of 15,000 yuan — for customers whose vehicles are invoiced and delivered in 2026 due to manufacturer-related delays.

Market institutions are optimistic about auto market performance. BOCOM International noted that the tax shift will drive consumer spending sprees. With automakers' year-end sales pushes, NEV sales are expected to stay strong in the fourth quarter.

The China Association of Automobile Manufacturers predicts NEV sales will surpass 16 million units this year, accounting for 50 percent of total vehicle sales or higher.

The China Automobile Dealers Association noted that with more models to be launched at the upcoming Guangzhou auto show, sales are expected to remain stable or see a slight increase compared to October. As automakers and dealers enter the final sprint to meet annual targets, the association remains optimistic about the market prospects for November and the fourth quarter.

Major automakers and NEV startups have achieved a distinctive sales performance in October. SAIC Motor reclaimed the top spot from BYD by selling 454,000 vehicles in the month, up 12.96 percent year-on-year. Its NEV sales hit 206,700 units, growing 32 percent.

BYD's sales reached 441,706 units, a year-on-year decrease of 12 percent but a month-on-month increase of 11.47 percent.

The Dynasty and Ocean series have remained the main sales drivers, with 395,015 units sold in the month, accounting for 89.43 percent of BYD's total sales.

Geely sold 307,133 vehicles in October, up 12 percent month-on-month and 35 percent year-on-year. This marks the first time Geely's monthly sales have topped 300,000 units. Its Lynk & Co brand sold 40,213 vehicles, while the Zeekr brand sold 21,423 vehicles. NEV sales for the month totaled 177,882 units, marking a 64 percent rise year-on-year. NEVs accounted for 58 percent of the total sales.

FAW Group sold 305,000 vehicles, up 8.1 percent year-on-year. Out of these, sales of its own brands reached 92,200 units, including 45,000 units from the luxury Hongqi marque.

Joint venture brands sold 213,100 units. Of these, FAW-Volkswagen sold 138,850 vehicles, with its market share in the gasoline vehicle segment increasing by 2.5 percentage points year-on-year. The joint venture reached the milestone of 30 million vehicles in late October, becoming the first passenger car company in China to achieve this.

Chery's vehicle sales reached 281,161 units, marking a year-on-year increase of 3.3 percent. Among these, new energy vehicle sales amounted to 110,346 units.

The automaker exported 126,434 vehicles in October, up 13 percent year-on-year, marking six consecutive months of over 100,000 units exported. This lifted Chery's cumulative exports to 1,062,862 units so far in 2025, making it the fastest Chinese automaker to surpass the 1 million export mark in a single year.

Changan sold a total of 278,000 vehicles in October, marking an 11 percent year-on-year increase. NEV sales reached 119,000 units, up 36 percent, setting a record. Its NEV sales from January to October have surpassed its total NEV sales for the whole of 2024.

Among NEV startups, Leapmotor maintained its leading position with 70,289 units sold in October — an 84.1 percent year-on-year increase. This not only marked Leapmotor's first monthly sales exceeding 70,000 units but also secured its eighth consecutive month as the leader among its rivals.

XPeng continues its robust growth with a monthly delivery of 42,013 vehicles, marking a 75.7 percent year-on-year increase. The range-extended version of the X9 MPV was revealed on Thursday, offering up to 452 kilometers of pure electric range and a total range of 1,602 km — marking XPeng's official entry into the extended-range vehicle market.

Nio delivered 40,397 vehicles in October, achieving a 92.6 percent year-on-year increase. Its sub-brand, Onvo, contributed over 17,000 of these vehicles.

In contrast, Li Auto faced pressure, delivering 31,767 vehicles in October, a 6.4 percent drop from September and a 38.2 percent decrease year-on-year. It has lowered its 2025 sales target from 700,000 to 640,000 vehicles.