The car modification market refers to the industry sector focused on fulfilling vehicle owners' personalisation needs by modifying and upgrading the exterior styling, interior equipment, and mechanical performance of original factory-produced vehicles. Covering exterior and interior modifications, performance tuning, and smart tech upgrades, it represents a vital segment of the automotive aftermarket.
China's car modification market has grown rapidly in recent years. In the first quarter of 2026, it recorded a year-on-year growth of 23.5%, significantly outpacing the overall automotive aftermarket. In terms of consumer spending structure, exterior styling accounts for 42%, interior upgrades 31%, performance tuning 18%, and smart tech modifications 9%. The China Automobile Dealers Association forecasts that within one to two years following the implementation of the new policy, the market size is expected to reach RM300,000,000,000, with long-term potential scaling into the trillions.
However, China's car modification penetration rate remains below 5%, lagging far behind the 55% level observed in mature markets across Europe, the US, and Japan. In 2024, the US modification market was valued at approximately USD 53 billion and Japan at USD 24 billion, whereas China reached only USD 9.5 billion over the same period. A vehicle parc exceeding 370 million units, coupled with over half of passenger cars being more than seven years old, theoretically creates massive demand for modifications; however, growth has long been suppressed by regulatory constraints.
China's car modification industry had a relatively late start and can be broadly divided into three stages: Initial Stage (1997–2007) , where the industry emerged from scratch with modification workshops appearing sporadically; Accelerated Growth Stage (2007–2017) , during which specialist modification workshops were established across major and mid-sized cities, driving rapid market expansion; and Policy-Driven Stage (2018–present) , when the General Office of the State Council first introduced top-level blueprints to develop the car modification sector, progressively easing regulatory restrictions.
In 2019, the "Work Specifications for Motor Vehicle Inspection" released by the Ministry of Public Security permitted passenger cars to install roof racks and upgrade wheels/rims, provided vehicle dimensions (length and width) remain unchanged and safety is ensured. In June 2026, nine government departments, including the Ministry of Commerce, jointly released the "Notice on Several Measures to Cultivate and Expand Automotive Aftermarket Consumption", marking the first national-level framework systematically regulating and supporting the car modification industry.
Upstream in the car modification value chain, the industry drives parts and advanced materials manufacturing; midstream, it creates employment across workshops, inspection centres, and technicians; downstream, it interconnects with motorsports, motor shows, road trips, and camping sectors. Deep collaboration between OEMs and specialist tuners is emerging as a new trend: BMW offers genuine M Performance upgrade kits within its authorised dealership network, while GWM TANK has partnered with specialist tuners such as Yunliang 4x4 to roll out factory-certified, road-legal co-developed models.
The core of the new policy lies in "tiered and categorised management", dividing supervision into three levels based on safety risks. Category 1 covers minor exterior and interior cosmetic modifications, such as body colour wraps and same-size wheel replacements, which support online registration; Category 2 involves functional performance upgrades, where compliant brake systems, suspension dampers, and shock absorbers require safety test reports from accredited bodies prior to endorsement; Category 3 comprises strictly prohibited high-risk modifications, such as engine power alterations, structural chassis changes, and EV powertrain tampering, none of which will be approved for registration.
A total of 40 pilot cities for automotive circulation and consumption reform were announced simultaneously, with Chaoyang District in Beijing, Tianjin, Guangzhou, and Hainan undertaking pilot tasks covering vehicle modification and EV conversion compliance guidelines. Under these new policies, the industry is projected to maintain an annual growth rate of around 20%, positioning 2026 as the inaugural breakthrough year for China's car modification sector.
The industry continues to face several challenges: enforcement standards remain inconsistent, with grassroots enforcement in non-pilot cities leaning towards heavy-handed crackdowns rather than constructive guidance; regulatory gaps in EV modifications must be addressed, as tampering with the electric powertrain voids manufacturer warranties and results in insurance claim rejections; and supporting industry infrastructure remains underdeveloped, with talent shortages and a lack of standardised guidelines still requiring urgent solutions.
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