(Yicai) Nov. 3 -- The sales profit margin in China's automotive industry has continued sliding this year, coming in at just 3.3 percent for the first three quarters of this year, as the industry grapples with rising costs and the impact of price wars.

Profit fell 23 percent year-on-year, and the September sales profit margin came in at just 1.4 percent, the lowest monthly level ever recorded, Cui Dongshu, head of the China Passenger Car Association (CPCA), said in a recent post.

Vehicle output totaled 23.37 million units in the first three quarters, down 4 percent year-on-year. Revenue rose 2.6 percent to CNY8.04 trillion (USD1.13 trillion), but that was less than the rise in costs, which climbed 3.8 percent to CNY7.16 trillion. Profit fell 23 percent to CNY267.5 billion.

In September alone, output came to 3.06 million units. Sales revenue rose 0.6 percent year-on-year to CNY1.04 trillion, while costs increased 2.5 percent to CNY925.7 billion, and profit plunged 68 percent year-on-year to CNY14.2 billion.

The industry's sales profit margin stood at 4.3 percent in 2024 and declined to 4.1 percent in 2025. September's 1.4 percent margin was even down from the previous record monthly low of 1.8 percent recorded in December 2025.

Cui said the pressure on profitability was partly down to a combination of rising costs and weak demand. The auto industry has come under heavy pressure from upstream sectors, with surging oil prices and sharply higher profits for suppliers of non-ferrous metals and semiconductors. At the same time, consumers have grown increasingly cautious about purchasing vehicles, adding to the operating pressure on automakers.

He said the root cause lies in the intense price wars that continue to squeeze the revenue side, while costs such as raw materials, research and development and distribution remain rigid and difficult to bring down. The government is pushing ahead with efforts to curb this involution, or cutthroat competition.

Relying on price cuts to drive sales volume alone, he said, is no longer a viable way to sustain profitability, and automakers need to shift toward optimizing their supply chains and tightening cost controls, using technological premiums to improve per-vehicle returns. If price-based competition persists, he added, profitability across the industry will likely face further downward pressure.

Cui noted that in the first three quarters, per-vehicle revenue across the auto industry chain came to roughly CNY344,000, up 5.8 percent year-on-year. Meanwhile, per-vehicle costs rose 7 percent to about CNY306,000 and taxes and fees increased 7.2 percent to CNY26,000, while per-vehicle gross profit fell 21 percent to just CNY11,000. This situation of revenue growth continuing to lag cost growth is a classic case of "rising revenue without rising profit."

Editor: Tom Litting