China car sales forecast to decline 10%

By the Editorial Team · Thursday, July 2, 2026

China's auto market is expected to shrink by 10 percent in 2024, with domestic vehicle sales dropping nearly 28 percent due to reduced government incentives and a tough economic climate, while exports are projected to rise by 41 percent. This downturn, coupled with fierce price competition and market overcapacity, is likely to force consolidation among manufacturers, especially in the electric vehicle sector where only a few companies remain profitable.

China’s automotive market is expected to face a significant downturn in 2024, with deliveries projected to decline by 10 percent amid a challenging economic environment and reduced government incentives, according to a forecast by global consultancy AlixPartners. The firm anticipates total light vehicle deliveries in China to reach 24.6 million units this year, including 10 million vehicles for export.

Domestic sales are forecast to drop sharply, with AlixPartners expecting a 27.7 percent decrease year-on-year, totaling approximately 14.6 million light vehicles sold within China. This decline follows an 18 percent fall in the first five months of 2024 after Beijing modified subsidy policies and ended a sales tax holiday earlier in the year.

The consultancy highlighted intense price competition as a key factor pressuring the industry’s profitability. Nearly all of China’s roughly 100 car manufacturers are expected to engage in aggressive discounting amid weak demand, further eroding margins. Stephen Dyer, Asia-Pacific leader of the automotive and industrial practice at AlixPartners, noted that scale alone no longer guarantees profitability. Instead, success will depend more on operational efficiency, rapid product cycle adaptations, and integrated approaches to design and commercialization.

Among China’s electric vehicle (EV) makers, only three—BYD, Leapmotor, and Xiaomi—are currently profitable, according to the report. Out of about 30 companies exclusively producing EVs, many are struggling with unsustainable price wars. AlixPartners predicts that by 2030, only seven of these EV-focused companies are likely to break even, with weaker or smaller players expected to either exit the market or be acquired.

Despite government appeals since mid-2023 urging manufacturers to avoid destructive price wars, the consultancy cautioned that further price cuts could worsen the industry’s outlook. Dyer also pointed to overcapacity in the market and converging technologies in new-energy vehicles as factors limiting product differentiation, making it increasingly difficult for manufacturers to maintain margins. Consumer sensitivity to price pressures in a sluggish economy is expected to reinforce this trend.

Exports are anticipated to provide some relief, with a forecasted 41 percent increase driven by the cost and technological advantages of Chinese-made vehicles. However, this growth is unlikely to fully offset the steep fall in domestic sales.

Other financial institutions have released less severe outlooks. Deutsche Bank forecasted a 5 percent drop in China’s passenger vehicle sales this year, while UBS predicted a 2 percent decline citing overcapacity and reduced policy support. Morgan Stanley, meanwhile, projected flat domestic sales for 2024.

The divergent forecasts reflect ongoing uncertainty in China’s automotive sector as it adjusts to evolving market conditions and shifts in government policy. The combination of weaker consumer demand, intense competition, and structural industry changes suggests that consolidation is likely to be a defining feature of the market in the coming years.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.