Goldman Sachs China Automobiles: Expert Call Takeaways - Demand Recovery Post CNY, Potential Rural EV Subsidy to Support Domestic Volume
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Goldman Sachs hosted an expert call on March 2, 2026, with the Deputy Secretary-General of the China Automobile Dealers Association to interpret recent auto industry policies and demand trends. The report highlights a clear demand recovery following the Lunar New Year, with February sales reaching nearly one million units, surpassing the industry expectation of 800,000.
Trade-in subsidy applications showed robust momentum, surging to 612,000 by February 19, up significantly from 335,000 on February 5. The expert projects domestic retail sales of approximately 26 million vehicles in 2026, representing a year-over-year change between a 3% decline and flat growth, while exports remain robust.
Regarding potential policy tools, the expert suggests that while increasing existing trade-in subsidies is unlikely, authorities may deploy financial instruments such as seven-year loans with approximately 1% interest subsidies. A rural electric vehicle subsidy of roughly RMB 8,000 per vehicle could serve as a primary reserve tool, modeled after the 2009 rural auto promotion program.
Anti-involution regulations issued on February 12, 2026, prohibit selling below production costs; however, enforcement will likely rely on industry self-discipline. Furthermore, L3 and L4 autonomous driving deployments are expected to accelerate, with more robotaxis emerging this year, spurred by competitive pressures from Tesla's progress.
Goldman Sachs maintains Buy ratings on BYD, Li Auto, and XPeng, a Sell rating on SAIC Motor, and a Neutral rating on NIO, citing stabilizing order trends and distinct company catalysts.