Cui Dongshu: Retail sales in the NEV market are lower than expected, and the overall pressure on industry inventories is high

The Zhitong Finance App learned that Cui Dongshu, Secretary General of the Passenger Transport Association, published an article stating that at the end of July 2026, the national passenger car industry inventories were 3.22 million vehicles, down 210,000 units from the previous month and 70,000 units from July 2025, forming a trend where inventory continues to decline. Among them, manufacturer inventory accounted for 29.1%, which is a relative decline. In July 2026, the total inventory of companies that only produced new energy vehicles remained at 790,000 units, the same as the previous month, an increase of 10,000 units from the peak inventory in November 2025, but an increase of 10,000 units from 780,000 units in July 2025. Recently, the manufacturer and channel inventories of new energy dealers faced lower than expected retail sales in the market, and the overall pressure on industry inventories was high.

The Passenger Link Branch predicts that the team's optimism for July 2026 is 19%, and the satisfaction rate after July at the beginning of August is 17%. Expectations are low but satisfaction is also poor. Mainly, the impact of high oil prices is too big. The team's optimism about the August market fell to 12%. This is a historically low forecast index for judging market optimism recently.

Inventory supports future days based on future N+3 monthly retail forecasts. Future retail changes on a rolling basis, so it is not a fixed monthly data, and the number of inventory days will also change according to forecast adjustments. According to the inventory at the end of July 2026 and the existing inventory estimated by the China Express Branch for the next 3 months, the number of future sales days is 55 days. Compared with 53 days in July 2023, 61 days in July 2024, and 60 days in July 2025, the overall number of inventory days in July this year is relatively good.

1. Passenger car retail trends in the narrow sense of the word in recent years

In July, the national passenger car market retailed 1.46 million vehicles. The year-on-year growth performance was weak, leaving the normal growth line. The reasons for the continued negative growth in July were diverse. The first was the impact of high oil prices, and the second was the strong regulatory nature of the new trade-in policy and the reduction in passenger car subsidies. Coupled with the sharp impact of upstream price increases, the underlying reason was low consumption capacity and willingness.

In July 2026, the national passenger car market retailed 1.46 million vehicles, down 21% year on year and 9% month on month; since this year, 10.161 million vehicles have been sold, down 20% year on year. In July 2026, the domestic passenger car market showed a trend of continuous total pressure, month-on-month weakening, and extreme structural differentiation. The downturn in the off-season was highlighted, and the structural adjustment of the industry was further deepened.

2. Passenger car wholesale trends in the narrow sense of the word in recent years

Passenger car manufacturers across the country wholesale 2.25 million vehicles in July, the same as the same period. For the first time in half a year, the monthly growth rate was basically flat. The trend in July of previous years was relatively stable. The domestic economy was sluggish but exports grew at a high rate this year, so the overall situation returned to stability. Due to strong exports, few domestic wholesalers, and good inventory removal results, channel pressure has improved markedly.

In July, passenger car manufacturers across the country sold 2.252 million units, which was basically the same as the previous year, down 4.7% from the previous month; encouraged by the sharp increase in exports, the year-on-year growth rate of passenger car wholesale in July was 20.7 percentage points higher than the retail growth rate.

3. Recent trends in passenger car production in the narrow sense

Passenger car production declined sharply in the first half of the year. The new national standard was launched in July, and market demand continued to be weak in the early stages. As a result, production in July was relatively good, and the year-on-year trend improved.

Passenger car production in July was 2.22,000 units, down 1.6% year on year and 4.9% month on month. In July, luxury brand production fell 21% year on year and 12% month on month; joint venture brand production fell 35% year on year, down 24% month on month; independent brand production increased 12% year on year, up 0.1% month on month.

4. Recent passenger car export trends in the narrow sense

Passenger car exports (including complete vehicles and CKD) were 920,000 units in July, and few exploded for 2 consecutive months, breaking through 900,000 units, in sharp contrast to the steady trend in July 2025.

Passenger car exports (including complete vehicles and CKD) were 918,000 units in July, up 90% year on year and 4.9% month on month, accounting for 41% of passenger car manufacturer sales (37% last month, 21% in the same period in 2025). New energy vehicles accounted for 58.8% of total exports in July, an increase of 14 percentage points over the same period. In July, exports of independent brands reached 775,000 vehicles, up 87% year on year; joint ventures and luxury brands exported 143,000 vehicles, up 108% year on year.

5. National passenger car industry inventory tracking

At the end of July 2026, the national passenger car industry inventories were 3.22 million units, down 210,000 units from the previous month and 70,000 units down from July 2025, resulting in a trend where inventory continues to decline. The launch of the trade-in policy in 2025 brought about overall optimism among manufacturers. The sales volume driven by trade-in was high, and manufacturers were relatively cautious in production, resulting in continuous inventory removal from May to August. Since the market has seriously fallen short of expectations since October last year, inventories hit a new high of nearly two years in November. Since then, production has been drastically reduced, but the decline in retail sales in the market also exceeded expectations. As a result, inventories in the first half of the year were high. Production cuts in July were strong, and inventories dropped significantly compared to the same period.

6. National passenger car manufacturer inventory tracking

Since 2023, the overall inventory of the passenger car industry has remained relatively stable. It fell back to around 2.97 million units in October 2024, rebounded to 3.79 million units in November 2025, then declined. Inventory in July 2026 fell to 3.22 million units, of which manufacturer inventory accounted for 29.1%.

Due to good market expectations in the early stages, manufacturers are enthusiastic about production, and overall industry inventory pressure is relatively uncontrollable. Currently, the share of manufacturers' inventory is gradually declining, the market is seriously sluggish, manufacturers are cutting production, and there is less pressure to absorb inventory as sales increase in the next few months.

7. National Passenger Vehicle Market Forecast Index and Satisfaction Index

The Passenger Link branch evaluates monthly market performance according to the method and evaluation results of the PMI index. According to the forecast summary estimates of the manufacturer's insiders, the prediction team of the Chengdu Branch has been very optimistic and gradually pessimistic since the beginning of 2025. The forecasting team was very optimistic about the market forecast from January to September 2025, and satisfaction continued to plummet to a low level starting in October. Optimism in July 2026 was 19%, and satisfaction was 17% in early August after July. Expectations were low but satisfaction was poor, mainly because the impact of high oil prices was too great.

The team's optimism about the August market fell to 12%. This is a historically low forecast index for judging market optimism recently. From the current inventory level of 3.22 million vehicles and expectations to judging market growth in the next few months, the pressure on the industry to absorb inventory is still strong. In view of the current situation where sales continue to fall short of expectations, car companies need to promptly track changes in the policy environment and market, carefully set the pace of production and sales, carefully increase inventory according to the dealer inventory structure, and clean up historical inventory in a timely manner.

8. Overall inventory characteristics of the national passenger car market

As the share of new energy vehicles increased, fuel vehicle sales declined, and the corresponding inventory pressure gradually decreased. Looking at the inventory cycle, from 3.25 million units in April 2023, then rebounded to 3.92 million units in November 2023, then declined to a low inventory level of 2.97 million units in October 2024.

The period of 2025 to early 2026 is still an inventory increase cycle, and the pressure on the industry continues to increase. Recently, the car market has declined significantly. Due to the severe contraction of new energy vehicles, the pressure on inventories has not been effectively relieved.

9. US passenger car industry inventory comparison

The US inventory is currently in 40-50 days, and the overall inventory pressure is low. This is also a reference target for the Chinese car market.

10. The number of inventory days in the national passenger car market declined slightly

As the market recovery arrived as scheduled in 2025, the production trend was strong. The characteristics of inventory removal in the early stages changed, and the reverse internal volume brought about inventory control in the industry, and inventory growth was relatively moderate. In the fourth quarter of 2025, although the expiration of the tax exemption policy was promoted, the trend actually fell short of expectations. The peak number of inventory days in the industry rebounded to 74 days in January 2026, and production was drastically reduced thereafter. Therefore, based on inventory at the end of July 2026 and the current inventory based on a comprehensive estimate of domestic retail sales volume for the next 3 months, the number of future sales days is 55 days. Compared with 53 days in July 2023, 61 days in July 2024, and 60 days in July 2025, the overall number of inventory days in July this year is relatively good.

11. The national inventory of new energy passenger vehicles continues to rise

Judging from the analysis of inventory change characteristics of companies that only produce new energy vehicles, the inventory of 200,000 units was in early 2023, and then entered a period of rapid inventory growth. In April 2025, the inventory of companies that only produce new energy vehicles reached 880,000 units. This is a recent peak. With the push of internal scrutiny, industry inventories fell to 620,000 units in September 2025. In July 2026, the total inventory of companies that only produced new energy vehicles remained at 790,000 units, the same as the previous month, an increase of 10,000 units from the peak inventory in November 2025, but an increase of 10,000 units from 780,000 units in July 2025. Recently, the manufacturer and channel inventories of new energy dealers faced lower than expected retail sales in the market, and the overall pressure on industry inventories was high.