China’s Price Wars Drive Automakers Abroad as Car Sales Fall 21.7%

Chinese automakers are seeking more overseas buyers as years of fierce price competition squeeze margins, while domestic passenger-car retail sales fell 21.7% year over year through September.

China recorded 13.33 million passenger-car retail sales in the first nine months of 2026. New-energy vehicle sales, a category that includes electric vehicles, declined 12.8% from the same period a year earlier.

Auto-manufacturing profits fell 22.8% year over year in the first nine months, even as total industrial profits rose 15.5%. The contrasting figures show the pressure on automakers amid broader growth in industrial profits.

Domestic passenger-car retail sales are projected to fall 22% this year to 18.5 million vehicles, below the total recorded in the first year of the COVID-19 pandemic.

An unstable job market and falling property prices have weakened consumer confidence, making households more cautious about major purchases. In Beijing, salesman Li Ke described the 2026 autumn buying season as the slowest in his 26 years on the job outside the pandemic. He said his dealership now closes two to three deals a week, compared with deals every day in past years.

“Customers are watching every penny,” Li said. Buyers are taking more time to weigh new models’ features and long-term value before replacing their cars. Li said his dealership moved from an expensive street-facing space to a location with less foot traffic and much lower rent to preserve cash. With profit margins eroding, he sees little reason to offer further discounts.

Price wars in recent years have helped drive Chinese automakers to look for customers abroad. The downturn has also reached Mercedes-Benz, whose China deliveries fell 31% year over year in the third quarter as it cut its 2026 Cars outlook.