Gasgoo Munich- Chinese auto market moved sluggishly in October, with the usual peak-season boost falling flat. Yet the shift from gasoline to electric power kept its pace.
According to the latest data from the China Passenger Car Association (CPCA), retail sales of passenger vehicles nationwide hit 1.643 million units in October — a 27.1% year-on-year drop and a modest 1.5% increase from September. For the first ten months, cumulative retail sales reached 14.978 million units, down 22.3% from a year ago. By volume alone, the broader market remains under pressure, showing only a slight monthly recovery.
Image source: CPCA
The real story lies in the internal structure. Retail sales of internal combustion engine (ICE) vehicles plunged 45%, with pure gasoline models tumbling 51% as contraction deepened. Meanwhile, new energy vehicle (NEV) retail sales climbed to 1.109 million units, pushing the penetration rate to a record 67.5%.
On one side, ICE vehicles continue to recede; on the other, NEVs are expanding alongside new product cycles. The "fuel-to-electric" transition didn't pause during the traditional peak season — instead, it accelerated from an already high base. The temperature gap between domestic brands and joint ventures, pure electrics and plug-in hybrids, and premium and entry-level markets remains stark.
So, how much substance did this "Silver October" really hold, and how will the market wrap up the year?
Domestic Brands Claim Over 70% Share as Joint Ventures Slide Nearly 40%
With the Mid-Autumn Festival falling in September, October offered a longer sales window, which should have delivered better month-over-month performance. With harvest income in the bank and temperatures dropping, demand for vehicles should logically be rising.
But the reality this year is that first-time buyers — the group that usually supports the autumn and winter markets — are underperforming. Continued weakness in the A00 and A-class segments reflects recent policies that favor consumption upgrades; higher subsidy thresholds have suppressed those without cars. Furthermore, a long-term lack of new ICE models and rising operating costs are preventing the full release of purchasing power among first-time buyers.
The CPCA noted that recent high oil prices, alongside rising costs for non-ferrous metals and minerals, have left consumers with both lower purchasing power and weaker willingness to buy.
Against this backdrop, the shifting relative positions between market camps matter more than the fluctuations in total volume.
Camp divergence remains the most striking theme of October. Data shows domestic brands sold 1.21 million units at retail — down 22% year-on-year but up 7% month-on-month. Their domestic retail share reached 73.8%, a 4.8-percentage-point increase from last year, firmly planting them above the 70% threshold.
Domestic sales are slipping, yet their share keeps climbing — the reason is simple: joint ventures are falling faster. Domestic brands have remained relatively stable in NEV retail and exports, providing the confidence for their counter-cyclical share gains.
Pressure on joint ventures is intensifying. In October, mainstream joint venture brands retailed 320,000 units, a 38% year-on-year drop and just a 2% monthly increase. By origin, German brands held 12.6% retail share (down 1.1 percentage points), Japanese brands 10.2% (down 2.1 points), and American brands 2.7% (down 1.1 points).
Joint ventures are actively trying to break the deadlock. According to CPCA analysis, new pure electric models from SAIC Volkswagen and FAW-Volkswagen saw strong volume growth, while SAIC GM's plug-in hybrids became sales drivers. Japanese hybrids also performed steadily. However, these gains are concentrated in the NEV sector and are insufficient to offset the decline of their ICE base.
The luxury market is seeing an even deeper adjustment. October retail sales for luxury cars hit 110,000 units, down 39% year-on-year and 34% month-on-month. Their retail share slipped to just 7%, a drop of 1.4 percentage points. Faced with the sustained offensive of domestic high-end NEVs, traditional luxury brands see no relief — the monthly decline was particularly sharp.
As domestic retail struggles, exports continue to prop up production capacity. Passenger vehicle exports (including complete vehicles and CKD kits) reached 928,000 units in October, a 68.5% surge, accounting for 35% of manufacturer sales — compared to just 19% a year ago. Domestic brands led the charge with 810,000 units, up 77%, while joint ventures and luxury brands exported 118,000 units, up 28%. Notably, NEVs made up 62.8% of total exports, up 20 percentage points, signaling a growing electrification footprint abroad.
Manufacturers are largely sticking to a production-to-sales model. In October, passenger vehicle production totaled 2.654 million units, down 10.1% year-on-year. The industry has drawn down 600,000 units of inventory over the first ten months, slowly digesting channel pressure.
The temperature gap on the retail leaderboard is even clearer. BYD led with 250,300 units in October, followed by Geely at 131,700. Leapmotor, Changan, Wuling, and Xiaomi followed with 83,600, 68,900, 67,700, and 50,100 units respectively, highlighting the growing pull of newer brands.
In terms of volume, the domestic retail scale of 1.21 million units is nearly triple the combined 430,000 units of joint ventures and luxury brands. It's not that joint ventures and luxury brands are inactive; rather, their ICE base is shrinking too fast for NEV gains to fill the gap.
The CPCA also noted that some low-volume joint ventures are gradually regaining vitality — a marginal signal easily overlooked. But looking at the broader trend, a pattern where domestic brands hold 70% while joint ventures and luxury brands continue to contract will be hard to reverse in the short term.
The agency believes the current market downturn is a phase driven by short-term policy disruptions and a high base — not a sign that auto ownership saturation has peaked.
NEV Penetration Climbs as ICE Sales Plunge More Than 40%
The sharpest contrast in October remains between the two curves of oil and electricity. Latest data shows NEV retail sales reached 1.109 million units, down 13.7% year-on-year but up 2.3% month-on-month. The retail penetration rate hit 67.5% — up 10.5 percentage points from last year and 0.5 points from September, marking another historic high.
Image source: CPCA
Breaking it down by camp, the NEV retail penetration rate for domestic brands reached 84.8%, while mainstream joint ventures managed just 19.7% and luxury brands 19.4%. The progress of electrification varies significantly across these groups.
The ICE side, by contrast, is cold. October retail sales for gasoline vehicles fell 45%, with pure ICE models dropping 51%. Standard hybrids were the exception, rising 28%. Conventional ICE retail sales totaled 530,000 units, a 45% decline. Across the board, domestic brands fell 46%, mainstream joint ventures 46%, and luxury brands 37% — almost uniform pressure.
Standard hybrids are a rare bright spot for the ICE camp. Retail sales climbed 28% in October, with FAW Toyota and GAC Toyota leading the way. Yet high fuel prices and ownership costs are pushing consumers toward NEVs as a one-stop solution; the resilience of standard hybrids reflects mostly transitional demand.
While retail demand softens, NEV supply continues to expand. October production of NEVs reached 1.835 million units, up 10.9% year-on-year. Exports hit 582,000 units, surging 144.7%, as overseas markets and manufacturer stockpiling together sustain production levels.
Taking a longer view, cumulative NEV retail sales for January to October reached 8.869 million units, down 12.9% year-on-year. While growth has slowed from a high base, the rising penetration rate confirms that the direction of electrification hasn't changed.
Technology routes are also shifting places. According to CPCA analysis, battery electric vehicles (BEVs) remain the market foundation, while extended-range electric vehicles (EREVs) strengthened month-on-month driven by new models. Aggressive growth from Xiaomi and Leapmotor is reshaping the EREV landscape, breaking the dominance previously held by a few brands.
Performance varies by vehicle class. Data shows B-segment EV wholesale volume hit 307,000 units, up 12% year-on-year, while the A0 segment reached 456,000 units, up 13.6%. The A-segment's share fell by 3.6 percentage points. The A00 segment sold 101,000 units, down 41% year-on-year but up 29% from September, accounting for 8% of BEVs. The entry-level segment remains a drag on the overall market, though there are signs of stabilization.
The CPCA emphasizes that only when entry-level EVs are truly普及 can the market gain sustainable growth. The short-term dip in A00-class vehicles is directly linked to changing subsidy thresholds and weak purchasing power at the low end — a weakness that remains glaring.
The internal hierarchy of NEVs continues to shift. In October retail sales, domestic brands fell 15%, while mainstream joint ventures surged 69% and luxury brands dropped 45%. By retail share, domestic brands held 68.2% (down 2.6 percentage points), mainstream joint ventures 5.9% (up 2.6 points), and new entrants 23.9% (up 1.2 points).
Among new entrants, BEVs accounted for 66.9% of sales, down from 74.3% last year, with volume growing rapidly in the 100,000 to 150,000 yuan range. "Second-generation" brands incubated by major traditional groups — such as ZEEKR, Aion, Arcfox, and Voyah — captured a 15.3% share, up 0.8 percentage points year-on-year.
Competition at the top of retail is fierce. Among brands selling over 20,000 NEVs in October, BYD held the lead at 250,300 units. Geely, Leapmotor, Changan, and Wuling formed the second tier with 131,700, 83,600, 68,900, and 67,700 units respectively. Xiaomi, Chery, XPENG, NIO, and HIMA followed closely with 50,100, 44,700, 36,900, 34,000, and 33,500 units.
On the export front, NEV shipments reached 582,000 units in October, a 144.7% jump. Small A00 and A0 class cars made up 56.4% of BEV exports. BYD alone exported 165,200 units, followed by Chery at 83,800 and Geely at 80,100, as high-value entry-level models pry open global markets. ICE vehicle exports totaled 346,000 units, up just 11% — far slower than NEVs — highlighting the stark divergence in export trajectories.
November Market: How Strong Will the Year-End Rally Be?
Regarding the year-end market, CPCA Secretary-General Cui Dongshu offered a clear verdict: "The traditional explosive 'Golden September, Silver October' peak season will likely continue to weaken and become the norm. The core issue is that the auto market has entered an era of stock replacement — the pool of first-time buyers is shrinking and has lower purchasing power, while high-end consumption remains strong."
In his view, NEV sales now follow product cycles rather than seasonal constraints. Combined with fading policy stimulus and rising wait-and-see sentiment, demand is unlikely to see a concentrated release in winter. This doesn't mean a peak season effect is impossible, but support for first-time buyers is crucial to getting more people into affordable, low-cost vehicles.
Image source: IM Motors
Cui also suggested automakers abandon the obsession with larger vehicles and pivot toward meeting the needs of middle-aged and elderly users, as well as first-time buyers, avoiding excessive premiumization. This judgment aligns with the sluggishness seen in the A00 and A-class markets in October and sets the tone for the year-end market.
Looking at the calendar, November has 21 production and sales working days — flat with last year and two more than October, offering relatively ample time for operations. Historically, November is often a softer period for the auto market, with the external economic environment and seasonal demand shaping the trend.
Structural opportunities still exist. As temperatures drop and migrant workers return home, purchasing demand in county and township markets could pick up, offering chances for both NEVs and mid-to-low-end ICE vehicles. The CPCA points out that the current market is characterized by "high penetration in big cities, weak penetration in counties and townships" — making first-time demand in lower-tier markets a blue ocean still worth exploring.
November is also a reasonable time to build inventory actively, as year-end consumers demand cars in stock. However, dealer confidence is lacking, and some channels are looking to exit, weakening the industry's reservoir function.
Exports are showing signs of "advanced timing and overdrafted volume." The pre-Christmas shipping window overseas concentrates before mid-November. Combined with expectations of lower export tax rebates and tightening tariff windows, the rush to export is intense. While this boosts short-term data, it is overdrafting momentum for the first quarter of next year — making linear extrapolation unwise.
On the domestic demand side, the pattern of "shrinking first-time purchases, replacement主导" continues. Smooth disposal of used cars is needed to drive replacement conversions, but first-time buyers have weak income expectations and longer decision cycles. While trade-in subsidies still have balances, their marginal utility is fading — they are serving more as a floor than a driver of new growth.
Falling lithium prices help lower battery costs, but the transmission has a lag, and benefits are concentrated among head manufacturers with proprietary battery capabilities. The CPCA judges that November will see a mild month-on-month recovery and narrowing year-on-year declines, but a true warm-up depends on whether the replacement chain can be unblocked and consumer confidence can stop falling.
Industry profit pressure remains unrelieved. According to the latest CPCA data, the auto industry generated 8.0435 trillion yuan in revenue from January to September 2026, up 2.6%. Profit stood at 267.5 billion yuan, down 23%. The sales profit margin was 3.3%, with September alone seeing just 1.4% — a four-year low. The squeeze on automakers from both sides won't reverse after just one peak season.
The squeeze on costs is equally evident. Operating costs for the industry reached 7.1627 trillion yuan in the first nine months, up 3.8% — outpacing revenue growth. Over the same period, the average profit margin for industrial enterprises above designated size was 5.68%, leaving the auto sector's 3.3% distinctly on the low end. Profitability in manufacturing remains a challenge for the industry.
All things considered, the year-end market is more likely to see a structural recovery. While month-on-month improvement is expected, a concentrated explosive rally is unlikely to return. Rushed exports and quarterly pushes will continue to prop up manufacturer supply. NEVs, smart driving, rural markets, and going overseas remain the relatively certain main themes, while ICE vehicles and the entry-level market will have to keep grinding it out.
