China’s total vehicle sales for 2025 were tracking for 32.9 million units, with a significant 11.4% increase in total sales by the first half of the year and a forecast 24.4% growth in New Energy Vehicle (NEV) sales to 16 million units by year-end. NEVs are a major driver of growth, making up over 44% of total sales in the first half of 2025.

With total new vehicle sales set to reach almost a record 33 million units, this equates to a 4.5% increase over 2024, when 31.4 million units were sold in China.

Bearing in mind that between 20% to 25% of new vehicles are fitted with leather interiors, this represents 6.6 to 8.2 million units, which is a key driver for finished leather demand in China.

The NEV Phenomenon

Analysts anticipate that the latter half of 2025 will sustain strong NEV growth, especially as major manufacturers launch new models boasting extended ranges and smart connectivity features. Urban centers are expected to see the highest uptake, driven by incentives and environmental regulations aimed at reducing emissions. Rural markets, traditionally slower to adapt, are also showing increased interest as entry-level NEVs become more affordable and accessible.

Looking forward, China is poised to reinforce its position as the world’s largest auto market, with NEVs representing a transformative force in the sector. Continued investment in research and development, expansion of public charging networks, and evolving consumer preferences suggest that the trajectory for vehicle sales will remain upward in both volume and value.

Sources:

• China Association of Automobile Manufacturers (CAAM),
• BloombergChina Ministry of Industry and
• Information Technology.