China's auto exports are showing steep growth, soaring more than 50% from the start of the year. With domestic demand in a deep slump, not only Chinese homegrown corporations but also global corporations operating in China have redirected China-made vehicles overseas. As new markets where Chinese local corporations are planting their flags in South America, Europe and Africa are rapidly increasing, competition for survival in the global auto market is expected to intensify.
According to the China Association of Automobile Manufacturers on the 12th, China exported 672,000 vehicles in February, up 52.4% from a year earlier. Cumulative exports for January–February came to 1,352,000 vehicles, an increase of 48.4% from the same period a year ago.
China's auto exports rose 19.3% to 5,859,000 units in 2024, and the increase widened to 21.1% last year (7,080,000 units). This year has started with a growth rate more than double that.
The increase in China's auto exports is largely due to weak domestic demand. February auto sales in China were 1,133,000 units, down 32.9% from a year earlier. Combined January–February sales were 2,799,000 units, down 23.1%.
In particular, passenger car sales froze, coming to 950,000 units in February, down 34.2% from a year earlier. The association said, "Multiple factors worked together, including policy adjustments (the gradual phaseout of subsidies), the Lunar New Year holiday, and a lack of consumer purchase intent."
Global finished-vehicle corporations are taking a heavy hit from the slump in the Chinese market. Volkswagen said on the 10th (local time) that last year's operating profit plunged 53.5% to 8.868 billion euros (about 15.1 trillion won), citing U.S. tariff and weakness in China as the reasons.
Michael Leiter, Porsche AG chief executive officer (CEO), said on the 11th that "there will be additional job cuts." The market expects Porsche's deliveries in China, which fell 26% last year, to plunge by nearly a third this year to about 30,000 units.
In response, global finished-vehicle corporations operating in China are diverting China-made production overseas. Tesla exported a total of 20,000 vehicles from China in February, a 4.2-fold surge from a year earlier. Honda is pushing to bring vehicles produced in China into Japan, a first among Japanese finished-vehicle corporations. Volkswagen recently won an exemption from the European Union (EU) for the additional 20.7% tariff on the China-made "Tavascan" from its Cupra brand.
Chinese finished-vehicle corporations are waging an all-out drive to expand exports. Chery Automobile Group exported 243,000 units in January–February, up 45.6% from a year earlier. Geely sold 156,000 units overseas, 1.5 times more than a year ago. In addition, BYD shipped 201,000 units, SAIC Motor (91,000 units) and most other corporations posted double-digit growth.
Chinese cars entering the Korean market are also increasing rapidly. According to the Korea Automobile Importers & Distributors Association (KAIDA), Chinese passenger cars registered in January–February this year totaled 2,304 units, accounting for 4.8% of the overall imported car market. Last year's annual registrations were 6,107 units for a 2.0% share, but in just two months this year, sales reached about one-third of last year's level.
This trend could ultimately lead to intensified competition across the world except the United States, where China-made cars do not enter. Bloomberg News said, "BYD is expanding into markets such as South America and the United Kingdom, and Geely entered 13 new markets last year, including Brazil and South Africa."
China's Great Wall Motors (GWM) is considering sharing Mercedes-Benz's plant in South Africa. GWM South Africa said it is "continuing to explore ways to strengthen its presence in the local market."
However, some expect the impact on Korea's auto industry to be limited, as demand for low-priced China-made cars is limited.
Haneul, a researcher at NH Investment & Securities, said, "Chinese auto corporations are selling well in global markets, but looking at Europe alone, their share has not expanded much beyond the 20%–25% range," adding, "The consumer segment attracted to low-priced cars also appears to be around that level, and the impact on Korean and Japanese corporations from rising shares of China-made cars is likely to ease starting this year."