Volkswagen and Toyota have surpassed BYD in China’s new-car market for the first two months of 2026, ending BYD’s consecutive run as the country’s top-selling brand in 2024 and 2025. BYD, the EV-focused automaker, fell to fourth place in January and February, capturing just 7.1% of the market, according to the China Passenger Car Association (CPCA).
VW’s lead comes from its Chinese joint ventures with FAW and SAIC, accounting for 13.9% of sales, followed closely by Geely at 13.8%. Toyota, with joint ventures with FAW and GAC, rounds out the podium.
Industry analysts suggest the shift is partly due to the Chinese government scaling back EV incentives. Beijing has removed purchase tax exemptions on electric vehicles and reduced subsidies for consumers trading in cars for EVs. This has prompted some buyers to pivot toward non-plug-in hybrids from brands like Toyota, seeking better value.
Despite BYD’s recent battery-systems update aimed at boosting sales, the company experienced its largest drop in new-car sales since the pandemic.
Volkswagen, meanwhile, is expanding its Chinese lineup, having started production on its first model co-developed with Xpeng and planning to launch over 20 new models in the country this year.
The change highlights how policy adjustments and price sensitivity are reshaping the competitive landscape for EVs and hybrids in China.
