China's car sales fall 22.3% in May as domestic demand weakens

China's domestic passenger car sales fell sharply in May, extending their decline for an eighth consecutive month, according to data released Monday by the China Passenger Car Association (CPCA).

Passenger car sales in the world's largest auto market dropped 22.3% year-on-year to 1.53 million units in May, CPCA data showed.

In the first five months of 2026, sales fell 19.7% from the same period last year to 7.18 million units.

The association revised its full-year forecast for China's auto market to an 11% decline, compared with its previous projection of a 1% drop.

The continued slowdown came as higher oil prices, driven by the Middle East conflict, weighed on demand for gasoline-powered vehicles. Weak consumer confidence and reduced policy support have also pressured purchases of big-ticket items such as cars.

Sales of electric vehicles and plug-in hybrids, which accounted for 62.2% of total passenger car sales, fell 7.5% in May, extending their decline since the beginning of the year.

Despite weakness in the domestic market, China's auto exports continued to grow.

Total automobile exports increased 74.7% year-on-year in May, while exports of electric vehicles and plug-in hybrids surged 112.6%.

The increase in exports has renewed criticism that China is shipping excess production abroad in strategic industrial sectors, including electric vehicles, while domestic demand remains weak.

China has become a major player in global electric vehicle production, but the sector is facing slower growth at home after years of rapid expansion, intense price competition and changing subsidy policies.

The decline in sales is also increasing pressure on foreign automakers operating in China, where domestic brands have gained market share with more competitive electric and hybrid models.