Automakers exported more than 3.8 million vehicles from China last year, up 62% from 2022 and enough to knock Japan into second place among vehicle exporting nations, according to a new report by the Chinese Passenger Car Association.
China’s vehicle export coup will rattle legacy automakers and their respective governments – nevermind that it comes with some asterisks. Toyota and other Japanese automakers long ago shifted significant shares of their vehicle production to factories in the U.S., Europe and Southeast Asia as trade barriers and supply chain economics made relying solely on exports unviable.
Auto exports remain a powerful symbol of industrial power. Just ask Germany’s automakers.
Less than a decade ago, the prospect of China as a major vehicle export hub was a hypothetical concern for Western automakers and politicians. Chinese automakers exported just over 800,000 vehicles in 2014, mainly to developing markets. They were struggling to hit a target of 860,000 for 2015.
Vehicles offered by Chinese brands were not up to the standards of developed markets. Legacy automakers’ joint ventures were focused on keeping up with fast-growing domestic demand.
That’s all changed. Chinese-made vehicles – including those made by Western automakers such as Tesla – are highly competitive and getting better. China’s BYD is as of the fourth quarter of 2023 the No. 1 EV company in the world, ahead of Tesla. Calls in Europe for new trade barriers underscore the progress Chinese brands have made.
China’s domestic market grew 5.6% last year to 21.7 million vehicles – by far the biggest auto market in the world. But that was not enough to soak up all the new capacity in the country’s auto sector as EVs displace combustion vehicles. For many Chinese auto factories – including joint ventures with Western partners - it’s now export or die.
About 73% of the vehicles exported last year burned petroleum, according to China Passenger Car Association data. Many went to Russia where domestic auto production has collapsed under pressure from Ukraine war sanctions.
Will Chinese automakers take the next step down the road Japanese and South Korean manufacturers have traveled and set up factories in overseas markets? No need to guess. Those moves are already starting in Europe and the United States.
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