Key facts
- China's car exports surged 300% between 2021 and 2024, making it the world's largest exporter.
- Export growth has slowed significantly in 2024, with passenger vehicle exports up 26% year-on-year.
- Chinese automakers face challenges including rising trade barriers, high overseas inventory levels, and increasing competition from Chinese plants abroad.
- China's overall passenger vehicle capacity utilization rate has fallen, indicating overcapacity in the industry.
- BYD and other Chinese automakers are expanding their overseas production capacity.
China's automotive industry is navigating a complex global landscape as a significant increase in factory output clashes with weakening domestic demand, leading automakers to increasingly rely on exports. Between 2021 and 2024, China's car exports surged by 300%, surpassing Japan to become the world's largest exporter of vehicles.
However, this export boom is showing signs of deceleration in 2024. While passenger vehicle exports grew by 59% and 74% year-on-year in 2022 and 2023 respectively, growth slowed to 26% in the first ten months of 2024. The value of monthly passenger vehicle exports peaked in October 2023, coinciding with the European Union's launch of an anti-subsidy investigation into Chinese electric vehicles (EVs). Export volumes continued to rise until August 2024, partly due to a rush to ship vehicles to Russia before a planned increase in recycling fees.
The slowdown is attributed to several factors, including rising trade barriers in both advanced and emerging economies, and a significant buildup of inventory abroad. Chinese original equipment manufacturers (OEMs) now hold nearly a year's worth of unsold inventory overseas, with levels reaching 28 months in the EU and 22 months in Brazil, partly driven by high Chinese EV prices compared to domestic offerings. The industry's overall passenger vehicle capacity utilization rate has fallen from 74.7% in 2023 to 70.3% through the third quarter of 2024, indicating substantial overcapacity.
In response to these challenges and to circumvent potential trade restrictions, Chinese automakers are increasingly establishing production facilities overseas. Chinese OEMs are expected to increase their overseas production capacity by 1.5 to 2 million vehicles by 2027, with BYD announcing plans for seven new international plants.