China’s automotive industry delivered a strong performance in 2025. According to the China Association of Automobile Manufacturers (CAAM), total vehicle production and sales reached 34.53 million and 34.40 million units, representing year-on-year growth of 10.4% and 9.4%, respectively. China has now maintained its position as the world’s largest automotive market for 17 consecutive years, demonstrating strong market resilience and bringing the goals of the 14th Five-Year Plan period to a successful close.
Among all market segments, the rapid rise of New Energy Vehicles (NEVs) stood out as the most significant highlight. With annual production and sales both exceeding 16 million units, NEVs accounted for nearly half of total vehicle sales, reshaping the structure of China’s automotive industry. Against this backdrop, polyurethane (PU) materials are playing an increasingly important role in automotive seating, interior systems, and acoustic insulation, supporting the industry’s transition toward greater comfort and sustainability.
Steady Growth Across Passenger and Commercial Vehicle Segments
Throughout 2025, China’s automotive market maintained solid momentum. Passenger vehicle production and sales reached 30.27 million and 30.10 million units, up 10.2% and 9.2% year-on-year. Commercial vehicles also recorded strong growth, with production and sales of 4.26 million and 4.30 million units, representing increases of 12.0% and 10.9%, respectively.
This growth was supported by a combination of favorable policies—including the expanded implementation of equipment renewal and consumer goods trade-in programs—and intensive new model launches by automakers, which stimulated end-market demand.
Monthly data in December showed some short-term fluctuations. Vehicle production and sales totaled 3.30 million and 3.27 million units, declining slightly year-on-year. Passenger vehicle sales softened, while commercial vehicles continued to grow. Despite this, CAAM emphasized that annual production and sales have remained above 30 million units for three consecutive years, underlining the long-term stability of the Chinese automotive market. Chinese-brand passenger vehicles further strengthened their position, accounting for nearly 70% of total sales, highlighting the rising competitiveness of domestic automakers.
NEVs Become the Core Growth Engine of the Market
New Energy Vehicles were the undisputed growth engine of China’s automotive industry in 2025. Annual NEV production and sales reached 16.63 million and 16.49 million units, marking year-on-year increases of 29.0% and 28.2%. NEVs accounted for 47.9% of total new vehicle sales, with monthly penetration exceeding 50% by the end of the year.
China has now maintained its position as the world’s largest NEV market for 11 consecutive years. Industry analysts attribute this rapid expansion to continuous technological innovation, strong policy support, and the accelerated transformation of Chinese-brand automakers. The integration of intelligent connected vehicle (ICV) technologies is further driving product upgrades and enhancing the overall competitiveness of the sector.
Polyurethane Materials Driving Comfort, Efficiency, and Sustainability
As vehicle electrification and intelligence accelerate, materials innovation has become a critical enabler of industry development. Polyurethane (PU), known for its versatility and performance, is increasingly applied across multiple automotive systems, especially in NEVs.
Automotive Seating Systems
PU foam remains a core material for automotive seating. By optimizing molecular structure and hydroxyl values, manufacturers can produce high-resilience (HR) foams that balance softness and support, reducing fatigue during long drives. Advanced PU polyether solutions enhance seat durability and comfort, while applications in headrests and armrests further elevate passenger experience.
Interior Trim and Low-Emission Solutions
PU is widely used in automotive interiors, including headliners, carpets, dashboards, door panels, and luggage compartments. As an adhesive and structural material, PU enables multi-layer lamination, improving both aesthetics and functionality. Low-emission PU systems help reduce VOC levels, supporting improved in-cabin air quality—an increasingly important requirement for modern NEVs.
Acoustic and Thermal Insulation
Thanks to its porous structure, PU foam offers excellent noise and vibration absorption, significantly improving cabin quietness. Specialized PU materials designed for NVH (Noise, Vibration, and Harshness) control provide effective insulation across a wide frequency range. In addition, recycled PU foam can be reused in acoustic applications, supporting circular economy practices.
NEV-Specific Applications
In NEVs, PU materials are increasingly used in battery packaging, thermal insulation, and lightweight structural components. These applications improve energy efficiency, enhance safety, and support compact vehicle design. Industry leaders emphasize that PU’s adaptability enables integrated, single-material solutions, making it a key enabler as NEVs move toward higher market penetration.
Automotive Exports Reach New Highs
China’s automotive exports also achieved record growth in 2025. Total vehicle exports reached 7.10 million units, up 21.1% year-on-year. NEV exports surged to 2.62 million units, more than doubling from the previous year.
The strong performance in overseas markets highlights the growing global competitiveness of China’s automotive and NEV industries, reinforcing China’s role in the worldwide transition toward low-carbon mobility.
Outlook: Material Innovation Supporting Long-Term Growth
Looking ahead, CAAM expects China’s automotive industry to maintain stable operations and continue its shift toward high-quality development. New energy vehicles are set to further strengthen their leading position, while advanced materials such as polyurethane will play an increasingly important role in improving comfort, sustainability, and intelligent functionality.
As market demand continues to be released and technological innovation accelerates, China’s automotive industry—supported by ongoing materials innovation—is well positioned to shape global industry trends in the years to come.
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