Going Global: China’s Vehicle Exports Surge 21% as Home Market Chills

In 2025, the Chinese automotive sector experienced a significant shift in its growth strategy, as total vehicle exports climbed by 21% to exceed 7 million units. Data released by the China Association of Automobile Manufacturers highlights that this surge was primarily fueled by the explosive popularity of new energy vehicles, including electric models and plug-in hybrids, which saw export volumes double to 2.6 million units. This pivot toward international markets is largely a response to a saturated domestic landscape characterized by fierce price wars and cooling consumer interest. While annual passenger car sales within China rose by 6% to 24 million units in 2025, the year ended on a weak note with an 18% decline in December sales. This slowdown is attributed to the reduction of government trade-in subsidies, which had previously incentivized consumers to adopt electric vehicles.

Looking ahead, the outlook for Chinese manufacturers remains focused on global expansion. Analysts from Deutsche Bank project a 13% increase in passenger vehicle exports for 2026, noting that foreign markets typically offer better profit margins and faster growth trajectories than the competitive domestic environment. This upward trend is expected to be supported by a recent resolution between China and the European Union regarding EV export disputes. Industry experts, such as Cui Dongshu of the China Passenger Car Association, anticipate that exports to Europe will maintain a steady annual growth rate of approximately 20% through 2028.

While major players like BYD—which overtook Tesla as the world's leading EV producer in 2025—are seeing a higher percentage of their revenue come from abroad, the broader industry still derives less than 10% of its income from international sales. S&P Global Ratings expects this contribution to rise as brands solidify their presence in key regions like Russia, Southeast Asia, the Middle East, and Latin America. However, significant barriers remain in North America due to high tariffs. Domestically, the pressure is mounting; UBS analysts predict further declines in local sales for 2026. This is exacerbated by a shift in subsidy structures from flat rates to price-based systems, which may specifically hurt the demand for budget-friendly vehicles priced below 150,000 yuan. Consequently, the push to capture global market share is no longer just a growth tactic but a vital necessity for Chinese automakers facing a challenging home market.