Bernstein: Chinese Autos - Key Takeaways from 2026 Outlook with Deputy Secretary of CAAM
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Bernstein shares key insights from a recent webinar featuring the Deputy Secretary of the China Association of Automobile Manufacturers (CAAM) regarding the 2026 outlook for the domestic auto sector. CAAM projects passenger car sales will grow by a marginal 0.5% year-over-year in 2026, with risks skewed heavily to the downside. This stagnation reflects the prior pull-forward of approximately five million units of demand from 2024-2025 trade-in subsidies and broader macroeconomic softness. Conversely, electric vehicle sales are expected to grow 15%, with exports rising 4%.
Intense price competition remains the foremost concern for OEMs, compounded by year-end inventory accumulation. However, the government is demonstrating a firmer commitment to curbing unhealthy competition. Following the release of draft pricing regulations in December 2025, Bernstein expects pricing pressure to moderate in 2026 under continuous regulatory oversight. Industry consolidation will progress gradually, with an estimated 10-20 OEMs potentially exiting the market within five years.
Joint ventures continue to struggle, with sales declining 4% year-over-year, but plan to launch around 30 new models in 2026 to regain traction. EV exports remain a critical growth pillar, having doubled to over 2.6 million units in 2025. However, a 50% tariff in Mexico poses a significant headwind, forcing Chinese automakers to pivot towards Southeast Asia and Europe. Bernstein maintains a more conservative domestic outlook, forecasting a 5-9% demand contraction alongside 10-15% export growth. Top picks include BYD and Xiaomi.