Automotive Market Government Support Propels Chinese Auto Sales to Record Heights

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China reports 21 million vehicles sold in eight months—a 12 percent increase. Electric vehicles are booming thanks to subsidies, and exports are also rising rapidly.

China's automotive market is on a record-setting path. In the first eight months of 2025, over 21 million vehicles were sold, marking an increase of more than twelve percent compared to the same period last year. This means that the milestone of 20 million units sold has been surpassed for the first time before the end of the year. Nearly 2.9 million vehicles were sold in August alone, reflecting a robust increase of 16 percent compared to the same month last year.

Industry observers attribute the current sales boom to a wave of new models, particularly in the field of electromobility, which is sparking buyer interest, as well as new government incentives. Additionally, electricity prices, which are already several times lower than in Germany, are decreasing in China. It is becoming increasingly affordable to drive electrically, leading more drivers to make the switch.

Government Promotes Electric Vehicle Purchases

As the central government is not satisfied with consumption and GDP growth, it has also revived a series of economic stimulus measures for car buyers. "The growth of the automotive market has primarily been driven by the government's consumption-boosting measures," says Cui Dongshu, Secretary-General of the Chinese Passenger Car Association (CPCA). "In particular, a nationwide trade-in program for vehicle exchanges provided a significant boost in the first half of 2025."

At the beginning of the year, Beijing reintroduced an incentive program, where buyers of a new electric vehicle are rewarded for trading in their old combustion vehicle. This initiative proves to be very popular, leading to a noticeable increase in sales, especially in the first half of 2025.

Market for Internal Combustion Engine Models Grows

A large-scale model offensive from manufacturers is also contributing to the increase in sales. Additionally, the government's campaign against excessive price competition within the industry is helping. The market is not only growing, but prices are also gradually stabilizing, as heard in industry circles.

Even vehicles with internal combustion engines are currently experiencing gains. In August, sales of conventional cars rose by 13 percent compared to the previous year. This marked the third consecutive monthly increase.

Alternative Drives as Growth Drivers

However, it is primarily the boom in so-called New Energy Vehicles (NEVs) that is driving the automotive industry in the People's Republic. NEVs mainly refer to battery electric cars and hybrids. From January to August, nearly ten million vehicles were sold in this segment, reflecting an increase of nearly 37 percent compared to the same period last year.

Vehicles with alternative drives accounted for over 45 percent of the total new car market since the beginning of the year. In August, the NEV share was just under 50 percent of total sales. "The market has clearly recognized the momentum of electric vehicles, and consumer enthusiasm for them remains high," says Cui. Particularly, micro and compact electric cars have seen significant sales recently, contributing substantially to the growth, according to the association spokesperson.

China's Automotive Industry Expands Export Business

China's vehicle exports have also surged. From January to August, 4.3 million vehicles were exported, representing an increase of 13.7 percent compared to the same period last year. Here too, electric cars and plug-in hybrids are making up an increasingly larger share. Approximately 1.5 million of all exported vehicles were NEVs, which corresponds to an 87 percent increase year-on-year.

While exports of conventional cars have slightly declined, the foreign business of Chinese NEV manufacturers is booming. Foremost among them, BYD has significantly increased its export figures. The manufacturer exported over 630,000 vehicles by the end of August, marking a 130 percent increase compared to the previous year. Chery also exported significantly more during this period, reaching nearly 800,000 vehicles, which is about ten percent more than in the same period last year.

China: Over 30 Million Vehicles as a Target

Industry observers are optimistic about the figures for the entire year of 2025. They predict that by the end of the year, significantly more than 30 million vehicles will be sold in total. The manufacturer association CAAM itself forecasts nearly 33 million vehicles, including over 16 million NEVs (New Energy Vehicles). The Chinese government has set similar targets. In a action plan from the Ministry of Industry and Information Technology (MIIT), sales of around 32 million vehicles by the end of 2025 are projected.

However, market observers warn that sustained success requires stable framework conditions. The ongoing fierce price competition, occasional fluctuations in government subsidies, and the international trade environment remain critical hurdles for the further development of the Chinese automotive industry.