+16.36% year-on-year! How much room does the internal combustion engine market still have to grow?

In May 2025, the internal combustion engine market was mixed, with the sales of the whole machine falling by 6.74% month-on-month, a year-on-year increase of 12.31%, and the cumulative sales from January to May increased by 16.36% year-on-year. Behind this data, it not only reflects the strong momentum of economic recovery, but also reflects the real challenges brought by structural adjustment and market fluctuations.

Growth momentum: core driving of rigid demand

At present, my country has become the world's largest and most complete internal combustion engine manufacturer with an industrial chain. During the 14th Five-Year Plan period, the annual production and sales volume has stabilized at about 80 million units, with an annual output value of nearly 800 billion yuan, and the ownership volume has exceeded 600 million units, driving the annual output value of upstream and downstream industrial chains to exceed 20 trillion yuan.

This huge volume provides the basic market for market resilience. The cumulative growth of 16.36% is by no means accidental. The rigid demand brought about by the recovery of the national economy has become the core driving force for growth.

From the market segment, the structural growth characteristics are significant. Data shows that from January to May, passenger car use increased by 13.99%, continuing to lead the way as the core engine, reflecting the resilience of the domestic passenger car consumption market; the marine sector soared by 20.20% year-on-year, benefiting from the recovery of water transportation and ship renewal trend; agricultural machinery use increased by 11.63%, behind which is the dual pull of agricultural machinery purchase subsidy policy and agricultural modernization; generator sets use even showed the strong demand for emergency power supply and infrastructure with a cumulative increase of 23.16%.

Growth bottlenecks: hidden pressure in the three major areas

Although the overall growth trend is good, the weakness in some market segments has revealed potential bottlenecks.

The recovery of commercial vehicles and construction machinery lags behind: In May, commercial vehicles fell by 9.18% month-on-month, with a cumulative increase of only 1.05% year-on-year, and the recovery pace was slow; construction machinery use decreased by 5.04% year-on-year. Although the cumulative increase of 1.55% is slightly higher, terminal demand has not yet fully recovered. These two major areas are closely related to fixed asset investment and logistics transportation. If subsequent infrastructure investment is madeThe growth rate of capital is lower than expected and may continue to drag down the growth of the internal combustion engine market.

The game between new energy substitution and traditional market: the use of engineering machinery and general machinery used in May fell by 5.04% and 9.51% year-on-year respectively, reflecting that the substitution effect of new energy equipment in specific scenarios has begun to appear. However, the data also shows that the popularity of hybrid models has driven the upgrading of internal combustion engine technology, showing a pattern of "substitution and upgrading coexist", which means that market growth will rely more on technological iteration rather than simply sales expansion.

Potential risks of fluctuations in raw materials and supply chains: Internal combustion engine production relies on bulk commodities such as steel and non-ferrous metals. If the price of raw materials rises or the supply chain is unstable, it may compress the profit margin of the company, which will affect the release of production capacity and technology research and development investment, and indirectly restrict the industry's growth potential.

Looking forward: broad growth space

The year-on-year growth of 16.36%, is essentially a phased result of the transformation of the internal combustion engine industry from "scale dividend" to "innovation dividend". Future growth potential will depend on the coordination between technological innovation and green transformation, the integration of leading enterprises and industrial chains, and the dual engines of domestic demand and international markets.

Technical innovation drive will open up incremental space, such as advanced combustion control technology, efficient energy conversion system, etc., which will improve the thermal efficiency and reliability of the gas engine itself, so that it still has significant survival value under the "dual carbon" goal, and promote the industry to accelerate its progress towards green, efficient and sustainable direction. There is broad room for growth in this sub-sector in the future.

Leading companies will accelerate the quality growth of the industry. Leading companies represented by Weichai will build technical barriers in high-end power, alternative fuels and other fields through continuous R&D investment. Their market strategies and product iteration directions directly affect the industry's growth path and will promote the concentration of industry resources in high-value-added fields.

The demand side is expanded to form a growth dual engine, which is comparable to people's livelihood for passenger cars, marines, agricultural machinery, generator sets, etc.The market for urgently needed has strong resistance to volatility, forming a "stabilizer" for industry growth, and has huge potential for deep penetration; at the same time, against the backdrop of global economic recovery and rising infrastructure demand in emerging markets, China's internal combustion engines' advantages in cost-effectiveness and technological adaptability will be further highlighted, and export growth is expected to become a new growth pole.

It can be foreseen that under the guidance of the "dual carbon" goal and high-quality and sustainable development, internal combustion engines will not be eliminated by the times, but will continue to support the key areas of the national economy in a more efficient, cleaner and more diverse form, and open up new growth space in the process of change.

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