June Chinese passenger car retail fell, with weak ICE continuing to pressure German joint-venture brands
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June Chinese passenger car retail fell, with weak ICE continuing to pressure German joint-venture brands
Goldman Sachs believes that in June 2026, China passenger car retail volume declined 23.2% year-over-year, with new-energy vehicles holding up better while ICE declined 39.0% year-over-year, leaving German joint-venture brands with high ICE dependence under near-term pressure.
- Passenger car retail in China in June was 1.602 million units, down 23.2% year-over-year, while rolling 3-month, 6-month and 12-month measures declined 22.2%/20.0%/10.0% year-over-year, respectively.
- NEV retail in June was 1.008 million units, down 9.4% year-over-year, with penetration of 62.9%; ICE retail was 594,000 units, down 39.0% year-over-year.
- German automaker joint-venture brand sales fell in line with weak ICE, and the report says about 95% of sales still come from ICE, so near-term prospects remain pressured before new model launches.
- Mercedes-Benz Cars, BMW, Audi/AUDI and VW fell year-over-year by 41.8%, 32.7%, 35.3% and 37.2% in June, respectively.
Report interpretation
Overview
This report tracks June 2026 China domestic passenger car retail, pricing, and powertrain mix, and focuses on sales performance of European automakers, especially German joint-venture brands in the Chinese market. It shows overall passenger car retail fell significantly, with weak ICE as the main drag; NEV penetration stayed elevated, indicating structural substitution is still progressing.
Core views
The core view is that China passenger car retail demand is in an accelerating downtrend, with ICE down far more year-over-year than NEV. Because German joint-venture brands including Mercedes-Benz Cars, BMW, Audi/AUDI and VW remain heavily dependent on ICE in China, their sales and shares face continued pressure in the near term. The report also notes that new model introductions could be key to later improvement, such as the Audi E7X EV, which contributed meaningfully to June sales, while FAW-VW's Tayron L PHEV remains in an early ramp phase.
Analysis framework
The report uses a monthly passenger car retail dashboard and rolling-period comparison approach, examining passenger cars, NEV, ICE and major European OEM China joint-venture brands by R1M, R3M, R6M and R12M for sales, year-over-year growth, market share and average price changes, and combines powertrain mix to explain brand performance differences.
Methodology notes
Track sales trends with 1-, 3-, 6- and 12-month rolling windows
This approach is used to separate one-month volatility from medium-term trends. The report shows passenger car retail declined 22.2%/20.0%/10.0% year-over-year on the R3M/R6M/R12M windows, indicating near-term downside pressure is increasing.
Break passenger car sales into NEV and ICE
The report uses NEV and ICE sales, year-over-year growth and penetration to assess structural changes. In June, NEV fell 9.4% year-over-year while ICE fell 39.0%, showing total volume declines were mainly driven by ICE.
Track sales and market share for German and European OEMs' Chinese joint-venture brands
The report compares June sales changes for brands such as Mercedes-Benz Cars, BMW, Audi/AUDI and VW across different rolling windows and links their performance to ICE share.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Chinese passenger car marketResearch universe
- Strengths
- NEV penetration has risen to 62.9%, and structural upgrading continues.
- Weaknesses
- Overall retail in June declined 23.2% year-over-year, with double-digit declines also in R3M and R6M windows.
- Comparison
- NEV is significantly stronger than ICE, showing powertrain divergence within the aggregate volume pressure.
- Risks
- If demand weakness persists, it could restrain industry revenue, pricing, and profitability.
- China NEVStructurally benefitting segment
- Strengths
- June sales were 1.008 million units, with 62.9% penetration and smaller decline than the overall passenger market and ICE.
- Weaknesses
- Sales still fell 9.4% year-over-year in June and R6M was down 13.7%, so it is not fully immune to demand pressure.
- Comparison
- Compared with ICE's June YoY -39.0%, NEV held up relatively better.
- Risks
- At high penetration, growth may slow, and price competition and model cycles may affect profitability.
- China ICEPrimary drag segment
- Strengths
- Still accounts for 37.1% of passenger car retail in June, so the installed base remains large.
- Weaknesses
- June sales fell 39.0% year-over-year; R3M/R6M/R12M were down 38.3%/26.3%/18.7%, respectively.
- Comparison
- Much weaker than NEV, making it an important explanatory variable in German joint-venture brand declines.
- Risks
- Acceleration of NEV substitution may continue to shrink ICE sales and share.
- German OEM China joint-venture brandsCore asset group affected by ICE weakness
- Strengths
- Some brands still have an existing customer base and potential for recovery through new models.
- Weaknesses
- The report says about 95% of sales still come from ICE, so short-term performance is directly hurt by ICE weakness.
- Comparison
- The pace of sales decline is broadly aligned with weak ICE performance and lags behind NEV-led brands.
- Risks
- Slower launch timing, ramp-up speed, and insufficient NEV competitiveness could extend the downtrend.
- Mercedes-Benz Cars China JVPressured brand
- Strengths
- Premium brand positioning still has recognition.
- Weaknesses
- June sales were 24,800 vehicles, down 41.8% year-over-year, with market share only 1.5%.
- Comparison
- The decline is larger than BMW and Audi/AUDI, with R12M down 28.3%.
- Risks
- Sales are almost entirely ICE-driven; if NEV products do not fill the gap, share may remain under pressure.
- BMW China JVPressured brand
- Strengths
- The 3-Series and 5-Series still support most sales.
- Weaknesses
- June sales were 33,073 units, down 32.7% year-over-year, with clear pressure during the model transition gap.
- Comparison
- R12M is down 13.5%, a smaller drop than Mercedes.
- Risks
- If new models fail to ramp in a timely manner, recovery in sales and share may be constrained.
- Audi/AUDI China JVPressured brand with new-model contribution
- Strengths
- The new Audi E7X EV became the third bestselling model in June, showing new products can add incremental sales.
- Weaknesses
- June sales were about 33,000 vehicles, down 35.3% year-over-year.
- Comparison
- R12M is down 6.0%, with better rolling performance than Mercedes and BMW.
- Risks
- It remains to be seen whether one-off contribution from a single new model can be sustained and whether the EV lineup can scale.
- VW China JVLargest but pressured brand
- Strengths
- June sales were 103,505 units and market share was 6.5%, so absolute scale is still high.
- Weaknesses
- June was down 37.2% year-over-year, with share down 156 bps year-over-year.
- Comparison
- Sales scale remains above other German brands, but R3M/R6M/R12M all declined clearly.
- Risks
- If the ramp of new models such as Tayron L PHEV is slower than expected, share pressure may persist.
Key data
- China passenger car retail in June1,601,924 vehicles, YoY -23.2%Average transaction price increased year-over-year by 3.1%, mainly reflecting mix shifts rather than incentive strength.
- China passenger car rolling YoYR3M -22.2% / R6M -20.0% / R12M -10.0%Recent declines are larger than the 12-month window, indicating acceleration in the downturn.
- NEV June retail1,007,633 vehicles, YoY -9.4%, penetration 62.9%NEV performance is clearly better than ICE, with R12M YoY only -1.7%.
- ICE June retail594,291 vehicles, YoY -39.0%, share 37.1%ICE is the main source of the overall passenger car decline and pressure on German joint-venture brands.
- Mercedes-Benz Cars June sales24,800 vehicles, YoY -41.8%, market share 1.5%Sales are almost entirely from ICE, with R12M YoY down 28.3%.
- BMW June sales33,073 vehicles, YoY -32.7%, market share 2.1%During the product transition gap, sales rely mainly on the 3-Series and 5-Series, with R12M YoY down 13.5%.
- Audi/AUDI June salesabout 33,000 vehicles, YoY -35.3%, market share 2.1%The new Audi E7X EV, launched two months earlier, became the third bestselling model in June and made a clear contribution to sales.
- VW June sales103,505 vehicles, YoY -37.2%, market share 6.5%FAW-VW Tayron L PHEV was launched in June, but its contribution remains limited while it is still ramping.
Impact & implications
For investment implications, the report reinforces the structural pressure in China’s auto market from the shift away from ICE toward NEV. In the near term, European, especially German, joint-venture brands that still depend on ICE may continue to face pressure on sales, market share, and capital efficiency. Whether future sales recovery can be improved through NEV or plug-in hybrid models will be a key test of brand resilience.
Risks
- Chinese passenger car retail demand continues to decline, extending industry sales and pricing pressure.
- ICE is falling faster than NEV, which may continue to pressure European joint-venture brands that are still ICE-heavy.
- If German automaker product launches and ramp speed fall below expectations, near-term sales recovery could be delayed.
- The increase in average transaction price is mainly due to mix changes and should not be read as a simple improvement in true pricing power.
- High NEV penetration has intensified competition, potentially creating risks to pricing, margins, and model cycles.
What to watch
- Whether June-onward and subsequent months’ China passenger car R1M, R3M and R6M year-over-year changes continue to worsen.
- Whether NEV penetration can be maintained above 60%, and changes in the BEV/PHEV/EREV mix.
- Whether ICE year-over-year declines narrow, especially for core ICE models of German joint-venture brands.
- The ramp speed and brand share contribution of new models such as Audi E7X EV and FAW-VW Tayron L PHEV.
- Whether market share in China for Mercedes-Benz Cars, BMW, Audi/AUDI and VW stabilizes.