China is forecast to become the first country in the world to export 10 million vehicles this year, just three years after overtaking Japan in 2023 to become the world's largest automobile exporter. Cracks are already showing, as Chinese cars surpassed Japanese cars in market share in Europe last month for the first time. Facing a domestic slump, Chinese electric vehicle makers are aggressively targeting overseas markets with their value-for-money offerings and technological competitiveness, rapidly reshaping the global auto market, analysts say.
Global consulting firm AlixPartners forecast Tuesday that China's automobile exports will reach approximately 10 million units this year, up 41% from 7.1 million last year. According to the China Association of Automobile Manufacturers, China exported 4.05 million vehicles in January-May, up 63% year-on-year. Among them, exports of new-energy vehicles including electric cars surged 110% to 1.83 million units.
If the forecast materializes, China will not only become the first country in the world to export 10 million vehicles but also widen its gap with Japan, the second-largest exporter. Japan's exports have stayed at around 4 million units over the past five years, and a similar result is expected this year. China previously exported 4.91 million vehicles in 2023, surpassing Japan (4.21 million) for the first time.
China is particularly standing out in the European market. According to Japan's Nihon Keizai Shimbun, five Chinese companies — BYD, SAIC, Geely, Chery, and Leapmotor — sold 138,410 vehicles in Europe last month, up 65% from a year earlier, overtaking Japanese cars (130,424 units) for the first time. Chinese cars' market share in Europe is expected to rise from around 6% last year to 17% by 2031, with sales this year projected to reach 2.3 million units, up 25%. Chinese cars have already secured double-digit shares in markets such as Norway (14%) and the United Kingdom (10%), and even in Germany, the birthplace of the automobile, BYD's share as of last month was tallied at 2.6%, more than triple that of a year earlier.
Chinese automobiles are penetrating overseas markets with low prices backed by government subsidies and complete supply chains. Although the European Union has imposed tariffs of up to 45.3% on Chinese-made electric vehicles since October 2024, Chinese cars maintain their price competitiveness even after accounting for the tariffs. For example, BYD's compact electric vehicle "Dolphin Surf Boost" sells in Germany starting at a minimum of 26,990 euros (about 47.77 million won), 3% cheaper than France's Renault "Renault 5 E-Tech," a model with similar performance. Chinese companies are expanding local production bases to avoid tariffs, making it highly likely their price competitiveness will increase further.
Their technological capabilities are also rising rapidly. BYD and Huawei have declared that they will fully compensate for losses in the event of an accident while using their advanced autonomous driving assistance systems. More than 10 Chinese EV makers, including Xpeng, Nio, and Geely, are developing their own artificial intelligence (AI) chips for autonomous driving, accelerating their move away from Nvidia. German automakers such as Volkswagen and Audi have recently unveiled a series of vehicle models incorporating the software technology of local Chinese companies including Xpeng and SAIC. They have found themselves receiving technology transfers from Chinese companies once considered a notch below. In fact, Chinese automobile brands' share of their local market reached 65% last year, more than double the roughly 30% of five years ago.
However, the force propping up these dazzling export figures is, ironically, the domestic slump. According to the China Association of Automobile Manufacturers, China's domestic auto retail sales in January-May fell 19% year-on-year to 7.11 million units. The industry's profit shrank 20% to 144 billion yuan, and the average profit margin fell to 3.4%, the lowest for the same period in the past five years. Total annual sales this year are also expected to reach only 24.6 million units, down 10% from the previous year.
This is because domestic sentiment has struggled to recover amid a price war fueled by an overcrowding of companies. There are well over 100 Chinese EV brands, and average factory utilization stands at just 50%. AlixPartners projected that restructuring will accelerate, saying, "By 2030, only seven of the companies focused on new-energy vehicles (NEVs) in China will reach the break-even point."
