China’s auto industry has kicked off 2025 with remarkable growth in Q1, as both vehicle production and sales grew by double digits. Fueled by government incentives, strong consumer demand, and a surge in new energy vehicles (NEVs), the market is maintaining a healthy upward trajectory.
The growth in Q1 highlights how a combination of favorable policies and rising confidence among consumers has bolstered the automotive sector According to data from the China Association of Automobile Manufacturers (CAAM), total vehicle production in the first quarter exceeded 7.56 million units, up 14.5% year-on-year. Meanwhile, vehicle sales exceeded 7.47 million units, marking an 11.2% increase compared to the same period last year.
New energy vehicles maintain lead
One of the most significant contributors to the growth in Q1 has been the rapid expansion of NEVs. These environmentally friendly vehicles have become a major focus for both manufacturers and consumers. In the first three months of 2025, NEV production grew 50.4% year-on-year, totaling more than 3.18 million units. Sales followed closely behind with 3.08 million units, up 47.1%, and accounting for more than 41% of total vehicle sales.
This strong performance underscores the growing role of NEVs in shaping China’s future mobility. The launch of new models, advances in battery technology and attractive subsidies continue to attract buyers to this segment.
Passenger cars dominate the market
The passenger car segment remained a stronghold for China’s auto market during the growth in Q1. Production reached nearly 6.51 million units, while sales lagged slightly behind at 6.42 million units, representing a year-on-year increase of 16.1% and 12.9%, respectively.
Domestic brands in particular played a key role in this expansion. Self-owned Chinese carmakers captured a significant portion of the passenger vehicle market. In March alone, they had a 66% market share, an increase of nearly 7 percentage points over the previous year. In the first quarter, these brands sold more than 4.36 million units, an increase of 28.8%, pushing their overall market share above 68%.
Commercial vehicle segment starts to rebound
Although the commercial vehicle sector experienced a mixed performance, it still contributed to growth in Q1. Production in this segment stood at a little over 1.04 million units, while sales came in at a little over 1.05 million units – marginal growth of 5.1% and 1.8% respectively year-on-year.
Natural gas-powered commercial vehicles saw little change, with sales reaching nearly 65,000 units. This was a slight improvement over last year, indicating cautious but steady recovery in this segment.
Auto exports continue to rise
Another major highlight of the growth in Q1 has been China’s continued expansion in vehicle exports. In the first quarter of 2025, the country exported nearly 1.42 million vehicles, marking a 7.3% increase year-on-year. Notably, NEV exports saw a dramatic increase, rising by nearly 44% to over 441,000 units.
Among the top exporters, Chery led the way in total export volume, while BYD saw the most dramatic growth, doubling its overseas shipments. Rising demand from international markets has helped solidify China’s position as a global automotive superpower.
Policy support and future outlook
The strong growth in Q1 is the result of timely government policies aimed at stimulating automotive consumption. Measures include tax incentives, trade-in programs and region-specific subsidies, all designed to encourage vehicle purchases. In addition, major auto events such as Auto Shanghai 2025 are expected to bring further energy to the market through the launch of innovative models.
Looking ahead, analysts anticipate that the momentum from these policy incentives and the unveiling of more advanced NEVs will continue in the second quarter. Local promotional campaigns are also likely to sustain consumer interest and spending.
In conclusion, China’s auto industry is riding a wave of growth in Q1. With NEVs at the forefront, supported by strong domestic demand and rising exports, the sector is well positioned for further expansion in the coming months.
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