Today, Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), released an analysis report on the profit trends of China’s automobile industry for January–February 2026.
According to the report, China’s automobile industry showed a trend of “growing volume but declining profits” in the first two months of 2026.
According to the data, in the first two months of 2026, operating revenue of the automotive industry reached RMB 1,482.4 billion ($215 billion), down 0.9% year-on-year.
Total costs amounted to RMB 1,314.7 billion ($191 billion), a slight increase of 0.2% against the trend. Profit was only RMB 43.5 billion ($6 billion), down sharply by 30% year-on-year.
The industry profit margin stood at only 2.9%, far below the average profit margin of 5.8% for downstream industrial enterprises.
From the production perspective, automobile output in January–February 2026 reached 4.02 million units, down 10% year-on-year.
Of these, 1.60 million units were new energy vehicles (NEVs), down 14% year-on-year, with the NEV penetration rate falling back to 40%.
Production of fuel-powered vehicles stood at 2.42 million units, down 7% year-on-year.
From the perspective of profit distribution across the industrial chain, divergence between upstream and downstream sectors has intensified.
In January–February 2026, the profit margin of non-ferrous metal mining reached 39.4%, and that of the petroleum extraction industry exceeded 30%. High prices of upstream raw materials have directly driven up cost pressures on mid‑downstream industries such as automobiles.
Data show that the per-vehicle revenue across the automotive industrial chain was RMB 369,000 ($53,505) (including double-counting within the chain), a year-on-year increase of RMB 36,000 ($5,220).
Per-vehicle costs rose by RMB 35,000 ($5,075); taxes and fees per vehicle increased by RMB 4,000 ($580); while gross profit per vehicle stood at only RMB 11,000 ($1,595), a year-on-year decrease of RMB 3,000 ($435). Rising costs have almost completely absorbed all gains from revenue growth.
In contrast, downstream industries such as tobacco, alcohol and pharmaceuticals enjoy much higher profit margins than the automotive sector. The auto industry’s profit margin of 2.9% is not only below the downstream industrial average of 5.8%, but also in sharp contrast to upstream industries including mining, utilities and energy.
Cui Dongshu noted that the persistent pressure on automotive profit margins reflects a combination of multiple factors.
First, upward cost pressure has intensified. Prices of key raw materials such as lithium carbonate have rebounded, and commodity prices remain high. Meanwhile, most automakers are not engaged in battery production, limiting their ability to control costs.
Second, fierce price competition continues. Data show that the sales profit margin of the auto industry fell to 4.1% in 2025, down further from 4.3% in 2024. Into 2026, ongoing price wars have further compressed industry profitability.
Based on historical trends, the profit margin of the automotive industry has dropped significantly from its normal historical level. The 2.9% profit margin recorded in January–February this year is at a historic low.
Despite the implementation of the national “Two New” policies and efforts to curb excessive internal competition, how automakers can cope with cost pressures in the short term remains the biggest challenge facing the industry.
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