Gasgoo Munich- China's traditional September sales peak arrived without the expected pickup in domestic demand.
Data released by the China Passenger Car Association (CPCA) on October 12 showed that passenger vehicle retail sales totaled 1.618 million units in September 2026, down 28.0% year on year but up 5.0% month on month. Retail sales for January–September reached 13.334 million units, down 21.7%.
Although September sales improved from August, the year-on-year decline was steeper than the cumulative drop over the first three quarters, leaving China's customary "Golden September" sales season subdued.
Exports told a different story. Passenger vehicle exports, including complete vehicles and completely knocked-down (CKD) kits, rose 73.7% year on year to 917,000 units, accounting for 36% of manufacturers' wholesale sales. Supported by those shipments, total passenger vehicle wholesale sales reached 2.549 million units, down 8.9%—a considerably smaller decline than in domestic retail sales.
The divergence between domestic demand and exports is central to understanding September's market. New energy vehicles (NEVs) increased their share of domestic retail sales to 67.0%, even as their retail volume declined year on year. For automakers, domestic demand, the changing powertrain mix and overseas markets are creating different pressures and opportunities.
A monthly recovery leaves domestic demand under pressure
some improvement as the traditional peak season began. Yet sales of 1.618 million units remained 28.0% below the previous September's level.
According to the CPCA, this year's peak season was characterized by competition for existing demand, with gains in some parts of the market offset by losses elsewhere. Several factors contributed to the month's performance.
The comparison base and timing of purchases were important. In September last year, the withdrawal of subsidies in some provinces prompted a rush to buy vehicles, creating a high base for this year's comparison. This year, the Mid-Autumn Festival holiday fell in late September, and sales weakened noticeably during the holiday week.
These factors affected the month's results, but cannot alone explain the 21.7% decline in retail sales over the first three quarters.
Powertrain trends reveal further changes in demand.
Retail sales of non-NEVs—a category that includes conventional hybrid electric vehicles (HEVs)—fell 43% year on year in September. Within that category, sales of vehicles powered solely by internal combustion engines dropped 49%, while conventional HEV sales rose 25%. Chinese brands, mainstream joint-venture brands and luxury brands recorded declines of 47%, 42% and 41%, respectively, in their non-NEV retail sales. The CPCA identified high fuel prices as an important factor weighing on demand for these vehicles.
The rising NEV share shows that the powertrain mix continues to shift. But performance within the non-NEV category was uneven: conventional HEVs grew even as non-HEV combustion-engine vehicles suffered a sharp decline.
NEVs were also affected by weak domestic demand. September retail sales of NEV passenger vehicles totaled 1.084 million units, down 16.7% year on year but up 7.8% month on month. Retail sales over the first three quarters reached 7.758 million units, down 12.8%.
The CPCA also said that AI-driven demand had pushed up memory and chip prices and tightened supply, slowing the incremental contribution from new NEV products. Chinese-brand A00-segment electric cars, the smallest vehicle segment, suffered a substantial domestic retail decline amid unfavorable effects from subsidy policies.
These explanations cover purchase timing, ownership costs, policy and product supply. Their individual contributions to the sales decline have not been quantified. What is clear is that September's monthly improvement did not eliminate the year-on-year pressure on the domestic market.
The automaker rankings show how broadly the domestic slowdown was felt. BYD remained the retail leader for locally made passenger vehicles, with approximately 247,000 units sold and a 15.3% market share, despite a 28.9% year-on-year decline. Geely Auto ranked second with approximately 177,000 units, down 24.0%, followed by Chery Auto with approximately 86,000 units, down 28.9%.
Leapmotor stood out as the only automaker in the retail top 10 to record year-on-year growth. Its sales rose 30.8% to approximately 78,000 units, placing it fifth with a 4.8% market share. By comparison, Changan Auto and FAW-Volkswagen recorded declines of 41.0% and 44.6%, respectively. The results suggest that weak overall demand did not affect all manufacturers equally, with some still gaining sales in a contracting market.
Export growth cushions the wholesale decline
Domestic retail sales alone suggest a sharply contracting September market. Including exports gives a different picture of manufacturers' overall sales.
Passenger vehicle wholesale sales totaled 2.549 million units, down 8.9% year on year and up 8.1% month on month. Production reached 2.590 million units, down 9.1% year on year but up 10.3% month on month. Wholesale sales outperformed retail sales by 19.1 percentage points in year-on-year growth terms, with rapidly expanding exports providing important support.
September passenger vehicle exports reached 917,000 units, up 73.7% year on year and 3.2% month on month. Exports accounted for 36% of manufacturers' wholesale sales, below August's 38% but substantially above the 19% recorded a year earlier.
The increase in export shipments cushioned the effect of falling domestic sales. The divergence was particularly pronounced among Chinese brands.
Their domestic retail sales fell 25% year on year to 1.130 million units, while wholesale sales declined just 0.2% to 1.965 million units. Meanwhile, their exports rose 75% from a year earlier to 812,000 units. The gap between domestic retail and wholesale performance illustrates the support that overseas shipments provided to Chinese brands' overall sales.
The wholesale rankings provide a company-level illustration of that divergence. BYD, Geely Auto and Chery Auto took the top three positions, with approximately 455,000, 290,000 and 282,000 units, respectively. Their wholesale volumes rose 15.8%, 6.2% and 4.7% year on year, even as all three recorded declines in domestic retail sales. Their respective shares of the wholesale market were 17.9%, 11.4% and 11.1%.
Leapmotor also outperformed in wholesale sales, growing 44.3% to approximately 96,000 units, while SAIC Motor Passenger Vehicle rose 14.5% to approximately 107,000 units. Changan Auto and FAW-Volkswagen, however, recorded wholesale declines of 25.4% and 45.5%. These contrasting results reinforce the need to distinguish manufacturers' overall shipments from domestic consumer purchases. The rankings alone do not establish how much exports contributed to each automaker's performance.
Exports by joint-venture and luxury brands also increased, rising a combined 62% over the previous year to 105,000 units. Their domestic businesses nevertheless remained under substantial pressure: mainstream joint-venture brands' retail sales fell 36% to 310,000 units, while luxury brands' retail sales dropped 29% to 170,000 units.
NEVs were a notable component of export growth. September NEV passenger vehicle exports reached 558,000 units, up 163.5% year on year and 7.7% month on month. Exports over the first three quarters totaled 3.887 million units, up 138.8% year on year. NEVs accounted for 60.8% of passenger vehicle exports in September, an increase of 21 percentage points from a year earlier.
This helps explain the contrasting performance of NEV wholesale and domestic retail sales. September NEV passenger vehicle wholesale sales rose 11.3% year on year to 1.666 million units, while domestic retail sales fell 16.7%. Assessing the NEV market solely through wholesale growth risks overlooking the pressure on domestic consumer demand.
Export growth supported manufacturers' sales, but the figures need to be interpreted within their statistical scope. Shipments are not equivalent to overseas retail sales and cannot establish the strength of automakers' overseas profitability, inventory positions or distribution networks. September's data show that overseas shipments are cushioning weaker domestic demand. Whether that support can be sustained remains to be seen.
A higher NEV share does not ease competitive pressure
NEVs accounted for 67.0% of domestic passenger vehicle retail sales in September, up 9.1 percentage points year on year and 1.7 percentage points month on month.
That put NEVs at roughly two-thirds of the domestic retail market, but did not mean their sales had grown. NEV retail volume fell 16.7%; because non-NEV sales declined more sharply, the NEV share continued to rise within a shrinking market.
Progress in electrification and growth in demand therefore need to be assessed separately.
A similar distinction applies to brands. Chinese brands increased their domestic retail market share by 2.8 percentage points year over year to 69.8%, even as their sales fell 25%. Their higher share reflected stronger relative performance, rather than an escape from the market downturn.
Within the NEV market, mainstream joint-venture brands' retail sales grew 36% year on year, while those of Chinese brands fell 19% and luxury brands declined 8%. Joint-venture brands made progress in NEVs, but these vehicles accounted for only 15.9% of their own retail sales, compared with 84.5% for Chinese brands and 44.9% for luxury brands. Growth in joint-venture NEV sales has yet to reverse the decline in their overall retail business.
Competition arising from the changing powertrain mix is also reaching the premium market. Recent substantial retail price cuts on models from several established luxury brands have drawn attention to the product and brand pressures behind those adjustments.
Responding to media questions, CPCA Secretary-General Cui Dongshu said premium NEVs were rapidly entering the RMB 300,000–500,000 price bracket, weakening the pricing premium commanded by traditional combustion-engine luxury vehicles. Against a backdrop of a soft overall market, dealer inventory pressure and shortcomings in some brands' electrification and intelligent vehicle offerings, established luxury brands were cutting prices to generate cash and retain customers.
"Relying solely on price cuts will continue to erode residual values and is not a sustainable strategy," Mr. Cui said. He argued that luxury brands needed to accelerate local development of intelligent electric vehicles, combine their craftsmanship with intelligent features, and improve inventory and distribution models, competing through added service value rather than price wars.
Luxury vehicle retail sales rose 12% month on month in September but remained down 29% year on year. These results do not establish that price cuts have successfully stimulated demand. They also underscore the distinction between short-term sales adjustments and building long-term competitiveness.
Cui expects further divergence within the luxury market. Established luxury brands may use discounts to stabilize their businesses in the short term, while Chinese premium NEVs could continue to gain share. Brands that successfully make the transition to electrification and intelligent vehicle technology may retain their position in specific market segments; second-tier luxury brands that lag behind could face greater pressure on market share.
For established brands, price adjustments can create room to compete for sales. Providing products and experiences that meet Chinese consumers' expectations remains a central challenge.
A fourth-quarter recovery depends on domestic retail demand
September produced several simultaneous signals: domestic retail sales improved from August but fell sharply year on year; exports continued to grow rapidly; and NEVs gained market share despite lower domestic sales.
Assessing a fourth-quarter recovery therefore requires looking at both manufacturers' overall sales and whether domestic consumer demand is improving.
Cui said achieving a full-year recovery relative to last year remained difficult. As the year-on-year comparison base changes, however, he expects sales declines to narrow gradually in the fourth quarter and market pressure to ease toward year-end.
A narrowing decline is still some distance from a return to growth. The key questions are whether the year-on-year drop in domestic retail sales continues to moderate, whether domestic NEV retail sales improve, and whether exports keep supporting manufacturers' overall volumes.
For clarity, the PVs mentioned above are all locally produced on the Chinese Mainland.
