Overview
- Official CAAM data show China exported about 1.037 million vehicles in June 2026, bringing first-half exports to roughly 5.1 million units and putting the country on track for much higher annual shipment totals.
- China’s domestic passenger vehicle retail sales fell about 20% in the first half of 2026, according to CPCA figures, and wholesale headline declines appear muted only because overseas shipments rose sharply.
- Brands with heavy BEV and PHEV lineups recorded the strongest growth in H1, while combustion‑centric incumbents suffered steep drops, with Mercedes reporting a roughly 30% Q2 fall and dropping out of China’s top‑20 by volume.
- Dealers and margins are under acute pressure: the China Automobile Dealers Association’s inventory alert index hit 57.2% in June and industry sales profit margins fell to multiyear lows as a prior price war eroded profitability.
- Analysts and company reports point to China’s scale and vertical supply‑chain integration, not mostly direct subsidies, as the main source of its cost edge, a dynamic that is accelerating European and UK market penetration and prompting tariff and policy scrutiny.