Stay informed with free updates
Simply sign up to the Chinese business & finance myFT Digest — delivered directly to your inbox.
China’s auto exports will expand by as much as 25 per cent to a record of more than 7mn this year, according to analyst and industry association estimates, as carmakers try to offset collapsing domestic sales of petrol cars and slowing electric vehicle growth.
Chinese and foreign carmakers including Volkswagen and Hyundai are repurposing their factories towards more lucrative export markets, in a strategic shift that puts pressure on manufacturers outside China.
Internal combustion engine (ICE) exports from China are expected to rise 4 per cent to 3.4mn this year, while electric vehicle shipments will surge more than 50 per cent to 3.7mn, according to China auto analysts at UBS. The analysts forecast Chinese exports will increase to 9.4mn by 2030, double the amount shipped in 2024.
Overseas markets had “become the pressure valve” for surplus car production in China, said Chris Liu, a Shanghai-based analyst with consultancy Omdia, which has also forecast an increase in Chinese auto exports. “As domestic demand cools, exports are being used to absorb excess ICE manufacturing capacity, rather than shutting down plants,” Liu said.
The China Passenger Car Association, an industry group based in Beijing, has forecast the country’s auto exports will rise by 20 per cent this year, driven by EV sales from Tesla rival BYD. “The auto market faces tremendous growth pressure in 2026,” Cui Dongshu, general secretary of the CPCA, said in December.
Mexico, Middle East, Russia and parts of Europe are among the top export markets, according to Chinese data.
Chinese carmakers are rapidly setting up factories and sales networks around the world to circumvent rising tariffs, except in the US where they are limited by levies and security controls.
Overseas sales, which include exports and cars made by Chinese companies in markets outside China, account for about 20 per cent of the Chinese industry revenue and close to half its earnings, according to UBS.
Seven of China’s biggest auto groups — BYD, Great Wall Motor, Chery, SAIC, Changan, GAC and Geely — have 31 factories overseas.
Shenzhen-based BYD, UBS analysts noted, was “the most aggressive” with plans to double the number of its European stores from around 1,000 to 2,000 by the end of 2026.
The domestic outlook in China remains tough as Beijing scales back tax breaks and subsidies for electric cars.
This will put financial pressure on a crowded EV market where more than 100 companies face wafer-thin margins and a regulatory crackdown on unsustainable discounting practices. Goldman Sachs analysts said profits this year will be further diminished with “aggressive” EV competition, with the release of 119 new models — roughly one every three days — and slowing volume growth.
Meanwhile, the decline of demand for petrol cars poses an existential threat for companies without a competitive EV offering.
As China’s economy boomed and car ownership soared, annual ICE sales rose from 3.9mn in 2005 to peak at 23.9mn in 2017, according to data from the China Association of Automobile Manufacturers, another local industry group.
Now, having retreated to about 14.5mn in 2025, ICE sales in China are set to sink to below 5mn by 2030, their lowest level in around 25 years, UBS has forecast.
Bill Russo, former head of Chrysler in China and founder of Shanghai advisory firm Automobility, said the most important issue facing carmakers was whether they could win the race to develop, and deliver at scale, better batteries, electronics and software.
“Who can scale and democratise the affordability of critical technologies that differentiates the brand in the eyes of the consumer? It is a race to scale,” he said.
Additional contributions by Nian Liu
Credit: Source link
