China Unveils Measures to Boost Auto Consumption and Aftermarket

Key facts

• China aims to boost auto consumption and the aftermarket through new measures.
• Forty cities are designated as pilot areas for auto circulation reforms.
• The plan supports vehicle modifications, motorsports, and recreational vehicle camping.
• China's auto sales reached 12.2 million units in the first five months of 2026.
• New Energy Vehicle sales reached 5.8 million units in the same period.

China is implementing a comprehensive strategy to stimulate its automotive sector, with new measures aimed at boosting both consumption and the aftermarket. The Ministry of Commerce, along with several other departments, has rolled out initiatives designed to reform auto circulation and cultivate new growth areas within the automotive industry.

Forty cities across China have been selected as pilot zones to implement these reforms, focusing on addressing restrictions in auto circulation and consumption, and fostering innovative business models. These efforts are intended to inject new momentum into the auto market. The plan also specifically targets the development of the automotive aftermarket, including the regulation of vehicle modifications, support for the recreational vehicle (RV) camping sector, and the promotion of motorsports.

Official data indicates that China's auto sales reached 12.207 million units in the first five months of 2026, with New Energy Vehicles (NEVs) accounting for 5.802 million units, a 3.5% year-on-year increase. The country's 15th Five-Year Plan (2026-2030) further underscores a strategic shift towards technological self-sufficiency and increased domestic consumption, setting ambitious targets for vehicle sales, including a significant portion for NEVs.

However, the automotive industry faces headwinds, including fiscal constraints leading local governments to cut car purchase subsidies and significant price competition impacting dealership profitability. Export ambitions also encounter external resistance, with potential tariffs from other nations posing a challenge. The Ministry of Commerce also published rules on supply chain security investigations, clarifying its ability to investigate foreign entities that violate international law or threaten China's supply chain security.