Chen Shihua urges gradual rollback of car purchase tax incentives amid industry challenges
At the 2025 Annual Report Conference on Automotive Industry Statistics, Chen Shihua, Deputy Secretary-General of the China Association of Automobile Manufacturers (CAAM), provided a comprehensive analysis of the current state of China's auto sector.
He noted that while overall vehicle production and sales continue to grow, the industry faces mounting pressures. These include sluggish domestic demand, high inventory levels, declining profitability, and ongoing risks from price wars. Additionally, geopolitical uncertainties are affecting the stability of global supply chains.
Chen highlighted the strong performance of new energy vehicles (NEVs) and vehicle exports, as well as the sustained market share of Chinese automotive brands. He also acknowledged early signs of success in addressing excessive competition, often referred to as "involution," within the industry.
To ensure long-term stability, Chen proposed a phased withdrawal of the current car purchase tax reduction policy. Specifically, he recommended reducing the tax benefit by 3% in 2026 and by 7% in 2027. He emphasized the need for continued policy support to stimulate market growth while also enhancing regulatory oversight and guiding the industry toward sustainable development.
Chen Shihua serves as Deputy Secretary-General of the China Association of Automobile Manufacturers (CAAM), a national industry organization established in 1987 under the Ministry of Industry and Information Technology. CAAM represents major automakers and suppliers in China, promotes industry standards, and plays a key role in shaping automotive policy and development strategies.
