TLDRs;
- BYD’s sales fell for the first time since February, slipping from 18% to 14%.
- Geely, Xpeng, and Xiaomi posted record-breaking sales amid strong EV demand.
- Regional funding cuts drove buyers to rush purchases, clouding Q4 forecasts.
- Rising inventories and losses could prompt new financial support and fintech lending tools
China’s passenger car market closed September with a notable surge in electric and hybrid vehicle sales, capping off what industry watchers dubbed a “Golden September.”
According to the China Passenger Car Association (CPCA), total passenger vehicle sales climbed 6.6% year-on-year to 2.3 million units.
Electric vehicles (EVs) and plug-in hybrids accounted for 57.2% of those sales, a 15.5% increase compared to the same period last year. The spike was largely driven by consumers and dealers rushing to capitalize on government trade-in subsidies before several provinces suspended their programs.
While the numbers highlight robust demand for clean mobility, the landscape is shifting fast. Industry leader BYD reported its first monthly sales decline since February. Its market share fell to 14% in September, down from 18% a year earlier, signaling rising competition across the nation’s fast-evolving auto sector.
Rival Automakers Seize the Spotlight
While BYD stumbled, several of its rivals accelerated to record-breaking results. Geely, Xpeng, Leapmotor, and newcomer Xiaomi each reported their highest-ever monthly sales figures, cementing their positions in the competitive mid-tier EV segment.
Xpeng’s latest success follows an aggressive model rollout strategy, including improved range and advanced driver assistance features aimed at luring younger, tech-savvy buyers. Meanwhile, Xiaomi’s first electric car has exceeded expectations, benefiting from the company’s massive smartphone user base and tight software-hardware integration.
Geely’s performance stood out as the company expanded its hybrid lineup and boosted exports, capitalizing on strong demand in Europe and Southeast Asia. These gains collectively highlight a shifting balance of power in China’s auto market, one where no single automaker dominates the road ahead.
Subsidy Freeze Clouds Q4 Outlook
Behind the sales surge lies a more fragile reality. The September uptick largely stemmed from consumers hurrying to redeem subsidies before regional programs paused. Provinces such as Jiangsu, Guangxi, and Wenzhou halted incentive schemes due to depleted budgets, while others, like Hubei, sharply reduced payouts and limited voucher distributions.
This uncertainty threatens to dampen fourth-quarter performance. Dealers are now sitting on swelling inventories, 3 million vehicles at the end of September, up from 2.6 million a month earlier.
Industry data shows the inventory warning index climbed to 54.5%, surpassing the 50% threshold that signals elevated risk. More than half of dealers reported weaker-than-expected sales, suggesting that September’s momentum may not last into the year’s final stretch.
Financing Strains and Policy Pressure
Beyond slowing demand, financial stress among dealers is mounting. Many are selling vehicles at a loss as manufacturers continue pushing inventory despite limited consumer appetite. The CPCA has called for additional financial support measures, including more flexible credit and liquidity tools to stabilize the retail network.
Experts argue that financial technology (fintech) providers could play a role by offering short-term, inventory-backed loans or cash-flow management products to help dealerships stay afloat. Southern China, where the inventory warning index hit 61.9%, faces the greatest pressure. Without targeted financing relief or policy adjustments, analysts warn, dealers could struggle to maintain operations heading into 2026.
