The past January was the first natural month after the new energy vehicle purchase tax was changed from “exemption” to “halved collection”. In the past ten years or so, China has always insisted on exempting new energy vehicles from vehicle purchase tax. The tax exemption limit for each passenger car has declined once, from full exemption to no more than 30,000. With the further development of new energy vehicles, new energy vehicle purchase tax subsidies are also facing another decline: starting last month, each passenger car will be exempted from exemption to be levied at half the purchase tax, and the tax reduction will not exceed 15,000 yuan.
As "policy subsidies" gradually fade away, car companies are also facing a real "market" test.
According to estimates from the China Passenger Car Association, retail sales of narrowly defined passenger cars in China will reach about 1.8 million in January 2026, a month-on-month decrease of 20.4% and a slight year-on-year increase of 0.3%. Among them, the retail sales of new energy vehicles are expected to be about 800,000 vehicles, with a penetration rate of about 44.4%. According to the data previously released by the China Passenger Transport Association, it can be calculated thatRetail sales of new energy vehicles in January this year fell 40.2% month-on-month and increased 7.5% year-on-year.
On the one hand, the passenger car market in January maintained the general pattern of “month-on-month decline” as in the past. This is because December every year is the year-end impulse season for car companies, and car purchase welfare policies are naturally released frequently. In addition, the Chinese people have a consumption tradition of "working hard for a year, buying a car and going home to celebrate the New Year", so they like to focus on buying cars at the end of the year. Therefore, sales in January were naturally lower than in December last year.
On the other hand, although the forecast sales in January this year are slightly higher than the same period last year, this is mainly due to the time advantage brought by this year’s Spring Festival falling in mid-February. However, although the year-on-year growth is a "slight increase", it has a significant decline compared with the sales volume of 2.034 million vehicles in January 2024. Behind this, it has a lot to do with the withdrawal of purchase tax subsidies and the strong wait-and-see sentiment of consumers.
In addition, the 44.4% penetration rate of new energy vehicles in January this year has dropped significantly compared with the nearly 60% penetration rate last month.It can be seen that with the weakening of “policy subsidies” for new energy vehicles, consumers’ enthusiasm for new energy vehicles has decreased.
From the perspective of specific car companies, there are several sets of data worthy of attention. As can be seen from the chart below, several car companies have experienced large year-on-year declines, and can even be said to be "a bit collapsed."
Their characteristic is that they basically focus on new energy products, and the prices of their main models are not high.
Specifically, Geely Automobile Group's passenger car sales in January reached 270,000 units, a year-on-year increase of 1% and a month-on-month increase of 14%, becoming China's largest independent brand in sales and the only car company to achieve both year-on-year and month-on-month growth. Among them, the sales volume of new energy vehicles reached 124,000 units, with a penetration rate of 46%. The remaining sales were supported by fuel vehicles.
Geely's good start in the new year also reflects the importance of product structure adjustment to a certain extent. Its strategic integration over the past year seems to be starting to work, with each brand performing its own duties. There are not only fuel vehicle products that have stabilized the country, but also new energy vehicles that have expanded their territory. Among them, Galaxy, Lynk & Co, and Ji Krypton are in different price ranges and complement each other.
Although the sales of Geely Galaxy and Lynk & Co both fell year-on-year last month, the Jikrypton brand, which has shouldered the responsibility of growing the brand and focuses on the luxury market, achieved a good result of 100% year-on-year growth.This also shows to a certain extent that the reduction of subsidy policies has a greater impact on popular Volkswagen models with high volume. For the mid-to-high-end market, price may not be the main factor to consider. Therefore, even in January, which is the slow season for car sales, the performance of Jikrypton brand, which positions mid-to-high-end models, is still strong.
This principle may have the same feeling for BYD, which has experienced a sharp decline year-on-year, with the decline far exceeding the general trend of the industry.
BYD Dynasty | Haiyang's total sales last month reached 177,000 vehicles. Although it still dominated the group's sales, it fell by 36% year-on-year and 48.5% month-on-month. The decline and uncertainty of policy subsidies have brought about a sharp drop in sales for these brand models. Although the sales of brands with higher prices and unique categories such as Fangbao and Zhangwang were almost halved month-on-month, they increased by 247% and 44.4% year-on-year respectively.This data also confirms that the policy decline mentioned earlier has a greater impact on Volkswagen's affordable models.
The picture on the left shows the sales volume in January 2026, and the picture on the right shows the sales volume in January 2025.
However, it should be pointed out that BYD exported more than 100,000 vehicles last month, a year-on-year increase of 51.5%, and exports accounted for almost half of the total monthly sales. One can wax and wane. It can be simply calculated that BYD's domestic sales in January this year fell by 52% year-on-year. The increase in export volume is also a good thing for BYD. With limited domestic demand for car purchases, it is indeed necessary to upgrade overseas markets to a "second battlefield" as soon as possible.
Chery Group is doing even better in going overseas. Among its monthly sales figures of 200,000 yuan, 60% of its models are sold to overseas markets, and it currently ranks first in the export sales of its own brands. Although "export" is indeed an absolute tool to help Chery Group's sales surge, as He Yuhua, a founding partner of Hegao Capital, said: "Chery's export countries are mainly Iran, Russia and emerging countries, and developed countries such as Europe need to further conquer. In addition, overseas competition has also further intensified."
In addition, the difficulties faced by Chery are not the same as those mentioned above. Currently, Chery's new energy penetration rate is only just over 20%, which is far less than the overall penetration rate of the industry. Sales of new energy brands Chery has poured resources into building, such as Xingtu, iCAR, and Zhijie, are not optimistic. The sales of the latter two in January this year were less than half of the same period last year.
Although in a short period of time, Chery can still rely on overseas expansion and fuel vehicles to hold up half of the sky, new energy vehicles are the general trend after all, and Chery still needs to achieve new energy transformation as soon as possible.
Although the monthly sales volume of Big Brother Great Wall is only 90,000 units, it has increased by 11.6% compared with the same period last year. Its five major brands, except for Euler, all grew at different proportions. Euler happens to be one of the models with a lower average unit price and is affected by the decline of policy subsidies. Great Wall's development problems are actually very similar to Chery's. The former's new energy penetration rate was only 20% in January.
After chatting about the big brothers, let’s take a look at the rising stars.
Hongmeng Zhixing topped the list of new car-making forces with monthly sales of 58,000 units. Among them, 40,000 were contributed by Wenjie, which increased by 83% year-on-year in January.Zhijie, jointly built by Hongmeng Zhixing and Chery, does not have such good data. Its sales volume was only 4,506 units, a year-on-year drop of 65.3%. Other industries are not optimistic either.As mentioned in the previous Zhiwei editorial article "The joys and worries of Hongmeng Zhixing after car companies handed over their souls to Huawei one after another", the development of Wenjie is significantly better than that of the other four industries. The reasons behind this include resource allocation, product definition and so on. According to official news from Hongmeng Zhixing, it plans to launch more than ten new cars this year, which will further enrich its product matrix and drive sales growth of non-world brands.
Xiaomi Motors delivered 39,000 vehicles in January. Although it fell month-on-month, it nearly doubled year-on-year. It is worth mentioning that the reasons behind this achievement are: Xiaomi Motors is in the period of SU7 facelift, mainly relying on YU7 to carry the weight, and in January, Xiaomi Motors was still surrounded by negative public opinions such as fire accidents and cooperation with "black fans". To a certain extent, this can also confirm the resilience of Xiaomi Auto’s development.
Leapmotor has maintained strong growth over the past year and has achieved consecutive quarterly profits. Against this background, its delivery volume in January reached 32,000 vehicles, ranking among the top three new car-making forces. Although it fell 46.9% month-on-month, its development is still strong considering its sales volume surged at the end of last year and policy subsidies.
As for "Wei Xiaoli", which is often regarded by the outside world as the representative of new car-making forces, none of the three car companies ranked among the top three new forces in terms of sales.Li Auto, which achieved positive profits in 2023 and 2024 and became famous, suffered a setback last year and repeatedly failed in its pure electric models. After finally releasing the Ideal i6, it got itself back in the game, but recently it was revealed that it was in a delivery crisis, with production capacity falling short of expectations.
Although Li Auto's sales in January were only a few thousand units less than Lipao's, they were both down year-on-year. For Li Auto at the current stage, building robots may be put aside first, and how to increase production capacity and accelerate product iterative transformation is the top priority.
Like Li Auto, Xpeng Motors both declined month-on-month.
Looking at NIO, it delivered 27,000 new cars in January, a year-on-year surge of 96.1%. However, this data does not quite explain how well Weilai sold in January, just because the performance in the same period last year was too "pull".
Generally speaking, in the first month of the implementation of the latest purchase tax on new energy vehicles in China, the Chinese automobile market has vaguely reflected the impact of the policy rollback on new energy vehicles, especially affordable models.As the policy continues to advance, it is possible to promote the transformation of China's automobile industry from "price" to "quality".
However, it should be emphasized here that market fluctuations are normal, and January sales are only a temporary pattern. With subsidies on the way down, car companies should soon find their own advantages beyond price and continue to compete with their peers for another 300 rounds.