China's passenger vehicle market came under pressure in the first quarter of 2026, while exports maintained rapid growth, providing support for the industry's overall performance.

In March, retail sales reached 1.64 million units, decreasing 15 percent year-on-year but rising 59.4 percent month-on-month, according to data from the China Passenger Car Association. They brought retail sales to 4.22 million units in the first quarter, down 17.4 percent year-on-year.

Cui Dongshu, secretary-general of the China Passenger Car Association, said the overall market performance was slightly better than expected. He said the number of newly launched models remained relatively low, with only 18 new passenger vehicle models introduced during the period. The Spring Festival holiday, which was later than previous years, was also a contributing factor.

Cui called for sustained policy support, such as purchase tax exemptions, to stabilize market growth and tap domestic demand, particularly in expanding vehicle ownership.

Some of the top players performed well though. SAIC Motor delivered 1 million vehicles in the first quarter, up 3 percent year-on-year. Of them, its indigenous brands combined delivered 657,000 units, up 9.3 percent year-on-year.

Leapmotor saw its sales total 110,000 units from January to March, up 26 percent year-on-year. Nio delivered over 83,000 units, surging 98.3 percent from the same period of 2025.

Cui was optimistic about the whole-year performance. "The auto market is expected to enter a phase of gradual recovery in the second quarter, though the pace may be moderate," he said.

"The market is likely to stabilize in the third quarter, with steady growth expected in the second half of the year."

Despite softer domestic demand, China's auto exports continued to register momentum. Data showed that China exported 1.55 million vehicles in the first two months of 2026, up 61 percent year-on-year. Exports in February alone reached 750,000 units, a surge of 79 percent.

New energy vehicles remained a key driver. NEV exports totaled 670,000 units in January and February, up 88 percent year-on-year, while February exports jumped 120 percent to 320,000 units.

Major Chinese automakers reported robust export performance in March, consolidating the growth trend.

Chery exported 148,777 vehicles in March, up 72 percent year-on-year, setting a new monthly record for Chinese carmakers. The company's exports have exceeded 100,000 units for 11 consecutive months, with first-quarter exports reaching 393,311 units, up 53.9 percent.

BYD reported overseas sales of 120,083 vehicles in March, up 65.2 percent year-on-year, bringing its first-quarter exports to 319,751 units. The company said it is confident of achieving its 2026 export target of 1.5 million units.

Meanwhile, Changan saw its overseas sales exceed 100,000 units for the first time in March, while Geely reported exports of 81,639 units, up 120 percent year-on-year. Geely's first-quarter overseas sales rose 126 percent to 203,024 units.

Industry observers said the strong export performance highlights the global competitiveness of China's auto sector, as domestic automakers accelerate their international expansion while the home market undergoes adjustment.