Gasgoo Munich- On October 26 that Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA), expects the domestic auto market to bottom out and recover in 2027. He projects retail sales growth will stay below 5%, averaging roughly 2%, even as market polarization intensifies.
Image Source: Huaban
Cui noted that 2026 faces "unexpectedly sluggish" performance due to a convergence of short-term factors: policy pull-forward effects, oil price shocks, spillover from AI costs, and weak consumer sentiment. Full-year retail sales are projected at just 18.50 million units—falling short of both the 2025 peak of 23.74 million and the 2020 trough of 19.29 million. CPCA data shows retail sales for the first seven months reached 10.17 million units, down 20.3% year on year.
Looking ahead to 2027, Cui argues that demand will recover, driven by tail-end effects from purchase tax adjustments, strong consumption during the Lunar New Year, retreating oil prices, and cost relief from falling lithium carbonate prices. On the supply side, reduced destocking pressure and an improved new-product cycle will provide support. Citing industry insiders, Xinhua News Agency predicts the sector will enter a stable stock cycle in 2027. The China EV 100 Institute similarly foresees a recovery phase, aligning with the CPCA's assessment of a market "bottoming out and warming up."
Cui cautioned that 2% growth represents a mild recovery rather than a robust rebound. More critical, he added, is the sustainability of inventory normalization and the restoration of new-vehicle supply chains.
