China targets 32.3 million in auto sales for 2025, or a 3% growth from the previous year, according to a government working plan issued jointly by eight Chinese ministries and departments on September 12.

New energy vehicles ( NEVs ) are a priority under the plan, with the sales target set at 15.5 million units, a 20% year-on-year increase.

From January to August, China has sold 21.1 million units, including 9.6 million NEVs, data from the China Association of Automobile Manufacturers shows. That represents a YoY sales growth of 12.6% for the entire sector, and a significant 36.3% increase for NEVs.

As such, the industry needs to sell an additional 11.2 million automobiles, including 5.9 million NEVs, for the rest of the year to meet the targets under the working plan.

While the target seems within reach, the working plan says “maintaining stable growth in the auto industry remains an arduous task”, given the multiple challenges facing the country’s economy, including weak demand, excessive competition, and trade uncertainties.

BYD continues to lead the sector, having sold 2.86 million units globally from January to August, followed by SAIC and FAW.

However, intensifying competition from other domestic auto brands such as Geely and Leapmotor is putting much pressure on BYD’s sales and earnings. The automaker’s net profit slumped 30% in the second quarter of 2025, breaking its streak of earnings growth for the first time since 2021.

The company has lowered its annual sales target by 16% from 5.5 million to 4.6 million units. The new target is only 7% higher than last year’s and represents the slowest growth in five years. BYD’s stock price on the Hong Kong Stock Exchange has dropped 30% from its peak in May as investors’ confidence wanes along with the company’s outlook.

Profitability remains a persistent concern across China’s auto industry. The industry’s revenue grew to 10.65 trillion yuan ( US$1.5 trillion ) in 2024, from 8.67 trillion yuan in 2021, but the average profit margin decreased to 4.3% from 6.1% over the same period, highlighting the growing imbalance between sales volume and earnings.