China's new car sales down 20% — worst year since 2021, EVs not to blame

China sold 8.7 million new passenger cars in the first half of 2025, down 20.2% year on year — a collapse that could make this the worst year for the Chinese auto market since 2021. The China Passenger Car Association forecasts full-year sales of 20.4 million units. One analyst warns that only seven or eight local EV makers will survive to 2030.

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Through June, China sold 8.7 million new cars, down 20.2% year over year.

The CPCA expects passenger car sales to reach 20.4 million this year.

One analyst sees only seven or eight local EV makers surviving by 2030.

After a sustained period of extraordinary growth, the Chinese car market is suffering from some serious growing pains. New car sales have collapsed this year, so much so that it may end up being the worst year for the Chinese auto industry since 2021.

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Figures from the China Passenger Car Association show passenger vehicle deliveries down 20.2 percent through the first half of the year, with 8.7 million units. The industry body expects a total of 20.4 million new cars to move this year, which would represent a fall of 14 percent from 2025, when dealers sold 23.7 million units.

Read: China’s Electrified Car Sales Sank 13%, And The World Is About To Feel It

That outlook may be optimistic. The head of Hong Kong/China Industrials Research at Citic CLSA Xiao Feng told CNBC that he expects total year sales to be down 20 percent from last year. He predicts that sales of new energy vehicles, including plug-in hybrids and battery-electric vehicles , will drop roughly 5-6 percent this year.

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ICEs Are Mostly To Blame

Perhaps unsurprising, it’s combustion-powered vehicles that are having the biggest impact on the total sales decline. In fact, ICE sales were down 39 percent year-on-year in June, accounting for 78 percent of the market’s total decline. This has largely been due to rising oil prices, triggered by the conflict in Iran.

The Chinese government has also pulled back some of its support for EVs. The cost of lithium has increased, as have the prices of the chips that new and advanced EVs rely so heavily on.

A Rebound On The Horizon

Things could improve next year. Feng anticipates a strong rebound in consumer demand, boosted by a surge in exports from Chinese car manufacturers.

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As the Chinese car market ebbs and flows , a period of significant consolidation is expected. Feng believes that by 2030, there will be just seven or eight major EV companies in the country, and foreign brands are expected to have real difficulty competing, likely prompting many to exit the nation entirely.

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