The ‘golden era’ of the Chinese automotive industry has ended, according to the boss of Chinese automaker Nio, after another month of stagnating new-vehicle sales.
April 2026 was the seventh straight month of declining new-vehicle sales in China as weaker consumer sentiment and a maturing market continue to push previously high sales levels out of reach, with the downturn extending into May.
Sales of plug-in hybrid and battery-electric vehicles are also expected to slow.
The slide has larger consequences for brands such as electric vehicle (EV) brand Nio, which is primarily focused on Chinese buyers, as opposed to companies such as BYD, Chery and SAIC Motor – owner of MG – which have increasingly turned to exports.
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Nio, which isn’t state-owned, makes the retro-styled Firefly EV hatch, with the company currently looking for an Australian distributor to sell the vehicle here.
There’s more opportunity overseas than at home right now, according to CEO William Li, who said the company is working harder for results in the domestic market.
With 370 million vehicles on its roads, China is “no longer a growth market, but rather a saturated market,” Mr Li said at the launch of the flagship Nio ES9 large electric SUV in Beijing per Reuters.
Mr Li said the Chinese industry has moved beyond its “golden era” as brands seek to defend market share after years of expansion, while increasing profit margins to make up for a lack of sales volume growth.
Many brands have looked to exports, with China overtaking Japan in 2025 to become the world’s largest vehicle-exporting nation. BYD and Geely are now among the world’s 10 best-selling automotive groups.
Yet overall, BYD missed its 2025 sales target by almost one million vehicles, with much of its growth coming from exports as sales growth in China slowed to seven per cent.
Despite being home to several hundred car brands, only a handful of Chinese automakers reportedly make a profit, with a period of consolidation expected as the industry increasingly looks offshore.
Key export markets now include not only Australia, but also Canada, which has slashed tariffs on Chinese vehicles and will allow a limited number of imports.
Tariffs imposed in Europe have encouraged brands such as Chery and BYD to establish vehicle production on the continent.
While Chinese brands remain largely shut out of the US, the world’s second largest new-vehicle market, Ford CEO Jim Farley has suggested the US government allow them entry through joint ventures with local automakers.
This was the same method used by China to encourage foreign brands to establish operations there over the past three decades.
Yet global supply chains and shipping costs have also affected sales in China.
A report from earlier this year suggested showroom prices in China could rise for the first time as increasing material costs cut into already slim margins.
In mid-2025, the Chinese government sought to stem domestic oversupply that was fuelling what it described as “irrational competition”, undermining the industry’s profitability.
It also looked to crack down on so-called ‘zero mileage’ cars, a practice where a new vehicle sale in China was recorded before the vehicle was exported and sold overseas as a low-mileage used car.
There has been no evidence of the practice resulting in vehicles being shipped to Australia.
Mr Li said Nio will focus on advanced driver assistance systems (ADAS), in-house software development and expanding its model range, which already includes a broad range of SUVs, sedans and wagons.