JPMorgan: China Auto Sales (December) — Domestic Demand Weak, Exports Up; Competition May Worsen in 2026
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JPMorgan reports that China's passenger car retail sales fell 15% year-over-year in December 2025 to 2.276 million units, extending a downward trend that began in October. New energy vehicle sales reached 1.337 million units, representing a 3% year-over-year increase and sustaining a high 59% penetration rate. Meanwhile, exports set a record, surging 51% year-over-year to 641,000 units, bringing the full-year total beyond 6 million.
Japanese automakers experienced broad declines. Toyota's 13% drop aligned with the industry average, while Nissan and Honda fell 23% and 40%, respectively. Honda continued to lose market share, and Nissan faced internal product cannibalization between its new plug-in hybrid and electric models.
The report highlights a significant policy shift for 2026: subsidies have transitioned from fixed amounts to price-ratio-based subsidies of 10% for internal combustion engine vehicles and 12% for NEVs. The China Passenger Car Association estimates this structural change will reduce per-vehicle subsidies by 20–30%. With approximately one-third of 2025 sales benefiting from subsidies, JPMorgan warns the sharper-than-expected subsidy cuts could trigger a broader demand pullback and intensify competitive pressures across the domestic market moving forward.