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China's Auto Market Sees Strong Growth Amid Shifting Consumer Trends

The Chinese auto market maintained its growth momentum in April 2025, with consumer demand significantly bolstered by government incentives, a boom in electric vehicle (EV) adoption, and a notable shift toward upgrade and replacement purchases. According to the China Passenger Car Association (CPCA), retail sales of passenger vehicles reached 1.7 million units in April, indicating a year-on-year increase of 14.5%. This marks one of the highest growth rates for April in the past decade. Remarkably, new energy vehicles (NEVs) gained prominence, with NEV retail sales hitting 905,000 units, a 33.9% year-on-year increase, and EVs now account for over half of all passenger car sales, achieving a retail penetration rate of 51.5%. Government policies, including nationwide replacement programs and tax exemptions for NEVs, have been crucial in driving this growth.

Another significant shift is observed in consumer behavior, with first-time buyers comprising only around 31% of private car buyers. Nearly 70% of private purchasers have taken advantage of the national trade-in program, which has received 2.7 million applications. This initiative has not only aided emissions reduction but has stimulated demand for premium and technology-rich vehicles. Despite a competitive market, the intense price war seems to be easing, with fewer official price cuts noted compared to previous years, indicating a shift toward enhancing owner benefits and non-monetary incentives. The CPCA anticipates a positive outlook for the second quarter, bolstered by the May Day holiday and consumer confidence in EV infrastructure, while internal demand remains pivotal for sustainable long-term growth.

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