China Auto Industry Profit Margin Falls to 3.8% in H1 2026, Manufacturing Margin at 1.5%

Profit margins in China's auto manufacturing sector have been declining over the past decade, falling from 7.8% in 2017 to 4.1% in 2025, and further to 3.4% in the first five months of 2026. Data from the China Association of Automobile Manufacturers showed that the profit margin for vehicle manufacturing was only 1.5% in the January-to-May period. During the same period, the average revenue per vehicle along the industry chain was RMB 343,000, up 5.8% year-on-year; cost per vehicle was RMB 305,000, up 6.7%; tax and fees per vehicle were RMB 27,000, up 7.3%; and gross profit per vehicle was RMB 12,000, down 16.2%.

From January to May 2026, China produced 12.28 million vehicles, down 5% year-on-year. Industry revenue reached RMB 4.21 trillion, up 1.4%; costs were RMB 3.74 trillion, up 2.3%; profit was RMB 144 billion, down 20%; and the industry profit margin was 3.4%. In comparison, the average profit margin for downstream industrial enterprises was 6.1%. In the first half of 2026, vehicle production totaled 15.1 million units, down 4% year-on-year. Industry revenue was RMB 5.19 trillion, up 1.8%; costs were RMB 4.61 trillion, up 2.8%; profit was RMB 195.4 billion, down 20%; and the industry profit margin was 3.8%, below the 6.5% average for downstream industrial enterprises.

Based on key financial indicators of industrial enterprises above a designated size, total profit in the auto industry fell 19.8% year-on-year in the first five months of 2026. In contrast, profit in the mining support services industry surged 162.6%, chemical fiber manufacturing rose 136.9%, and non-ferrous metal smelting and rolling increased 117.1%.

In terms of sales, market concentration continued to rise. In the first half of 2026, the top ten automakers by sales volume sold a combined 12.649 million vehicles, accounting for 84.2% of total sales. SAIC Motor ranked first with 2.045 million vehicles, followed by BYD and Geely Auto in second and third places. The market share of domestic brands continued to expand, reaching 64.7% in the first half of 2026, and 68.7% in June alone, while the combined market share of other joint-venture brands fell below 40%.