A record 156 new car models are expected to hit the Chinese market in the second half of 2026, endangering small players’ profitability as a new price war looms. The mass-market segment is expected to see an influx of intelligent electric vehicles (EVs) priced at around CNY100,000, but only leading carmakers were expected to secure large orders thanks to their brand awareness and production advantages, analysts said. “Demand for new cars has rebounded but it is not enough to shore up carmakers’ profitability,” said Eric Han, Senior Manager at Shanghai consultancy Suolei. “New models will drive overall deliveries of mass-market brands, but some companies may face a do-or-die situation due to escalating competition.” An HSBC report said the mainland China market would see 58 new models in the third quarter, followed by another 98 in the three months ending December. About 90% of the new entrants were expected to be EVs, it added. About 50 EV makers have been banking on new models to sustain sales growth, thanks to consumers’ eagerness to embrace new technology. But developing a new model typically costs billions of yuan in research and development (R&D), leaving underperforming players vulnerable to financial strain.
The China Automotive Dealers Association (CADA) projected June deliveries at 1.65 million units, a 20% year-on-year decline. HSBC said the figure would largely fall short of expectations despite stepped-up promotions during the Dragon Boat Festival on June 19. Deutsche Bank predicted in January that total vehicle sales in China – including EVs and petrol cars – would fall 5% this year, while UBS projected a 2% fall, citing overcapacity and reduced government support. BYD and Geely, the country’s two largest carmakers, plan to launch multiple mass-market models in July and August, featuring higher-performance batteries, more advanced self-driving software, and more sophisticated in-car entertainment systems. “The next inflection point from the low to high season is likely in late August or early September, when we expect demand to regain stronger recovery momentum,” HSBC said in the report.
China produced 34.5 million vehicles in 2025 – including buses, lorries and passenger cars – up 10.5% year-on-year, according to the China Association of Automobile Manufacturers (CAAM). The country had an estimated total annual capacity of around 50 million units, said Nick Lai, head of Asia auto research at JPMorgan, in October. Of the nearly 50 Chinese EV makers, only a handful – including BYD and Stellantis-backed Leapmotor – are profitable.
Dealers said a new round of price competition, via promotions and cheaper car loans, would likely take shape late in 2026. Two out of every three new cars sold in China are either pure electric or plug-in hybrid vehicles, according to the China Passenger Car Association (CPCA). International brands, due to their slow transition to electrification, have been losing market share to local rivals over the past three years. In May, international carmakers from Volkswagen to Toyota held a combined 31.3% share of the Chinese market. In the first quarter, the foreign brands, which retained an edge in building petrol models, commanded 39.8% of the Chinese market as a subsidy roll-off and reduced tax incentive curbed demand for EVs, the South China Morning Post reports.
In May, China exported 446,000 NEVs, a year-on-year increase of 110%, accounting for nearly half of total passenger vehicle exports, a figure that comes as no surprise.
