China car sales downturn extends into May as Volkswagen tests EV revamp

Published Mon, Jun 8, 2026 · 05:57 PM

[BEIJING] China’s car sales fell 22.1 per cent in May, underscoring the persistent weakness in the market that prompted the China Passenger Car Association (PCA) to sharply downgrade its annual sales outlook.

The PCA now expects full-year passenger-vehicle sales to drop 11 per cent, compared with its earlier projection of a 1 per cent decline. The association said the revision reflects the unexpectedly severe drag from high oil prices on consumer demand and the broader industry supply chain – conditions already evident in the May sales slump.

Passenger-vehicle sales declined to 1.5 million last month, with internal-combustion-engine models dropping 39 per cent year on year. Sales of new energy vehicles, which includes EVs and plug-in hybrids, also fell 7.5 per cent compared to the same period last year, according to data from the association.

Exports grew 75.1 per cent, the data showed, but the increase was not enough to counter the domestic slump.

“China’s auto market downturn is mainly driven by the sharp drop in fuel‑powered vehicle sales under the pressure of high oil prices, which has weighed heavily on the industry’s performance,” PCA general secretary Cui Dongshu said during a briefing on Monday (Jun 8).

The industry had expected a recovery starting from April, yet sales in the first five months of the year contracted 19.5 per cent, underscoring the challenges automakers face as government support measures are scaled back and overcapacity pressures intensify.

“We believe the overall auto market will gradually improve in the third quarter and return to growth in the final quarter,” Cui said. “So we forecast the growth rate to rebound from the current 19.5 per cent drop to an 11 per cent decline for the full year.”

Overseas EV sales are still strong. BYD’s total vehicle sales rose for the first time in nine months in May. The Shenzhen-based automaker delivered 383,453 vehicles last month, up 0.3 per cent from a year earlier on strong international demand. Nio also reported a 62 per cent year-on-year increase in sales.

Tesla shipped 85,982 EVs from its Shanghai plant, of which 47,281 were sold in China. This represented an increase from a year earlier.

Shares of Chinese automakers underperformed the broader market in May, dropping 11.3 per cent on average compared with the MSCI China Index’s 3.4 per cent decline, according to Bloomberg Intelligence calculation. REUTERS