China becomes the world’s largest car exporter, approaching Japan

BEIJING – China was close to replacing Japan as the world’s biggest car exporter in 2023, but failed to do so, data released this month showed.

According to Japanese customs data, Japan exported 5.97 million vehicles last year, higher than the 5.22 million vehicles reported by Chinese customs data.

According to the Ministry of Commerce, more than 70% of China’s automobile exports in 2023 will be gasoline-powered vehicles, noting that exports of new energy vehicles are growing rapidly.

Many of those gas-powered cars ended up in Russia, said Sara Tan, an economist at Moody’s Analytics.

“After Russia invaded Ukraine in February 2022, many car manufacturers withdrew from Ukraine, and the void was only filled by Chinese manufacturers,” she said. “In the first 11 months of 2023, car shipments to Russia increased by about six times compared to 2022 in value terms.”

Tan said Mexico is also a major destination for China’s gasoline-powered vehicle exports, but most of its vehicle exports to Belgium and the United Kingdom were new energy vehicles.

In fact, Mexico was the second-largest export destination for Chinese cars after Russia, said Jorge Guajardo, a Washington, D.C.-based partner at Dentons Global Advisors and a former Mexican ambassador to China.

Guajardo said in a phone interview that Chinese-made cars are rapidly expanding their share of Mexico’s auto market, which is because the Central American country traditionally has a very strong auto industry (Mexico’s largest employer). He said it was a “new phenomenon” since it was first protected.

He said it’s still unclear exactly why Chinese cars are growing so quickly in Mexico, but part of the reason is international automakers.

“The factories and plants that they had in China for the Chinese market will be lost, and they will start redirecting their capacity from China to exporting overseas,” he said. “China has significant overcapacity in auto manufacturing.”

The penetration rate of new energy vehicles in China will reach 40% of new passenger car sales by the end of 2023, significantly exceeding the approximately 7% in the United States.

A CNBC analysis late last year found that the rapid shift to electric vehicles is rapidly eroding the market share of international auto giants, which have been slow to release new models in the category.Germany’s Volkswagen The company was one of the foreign automakers on track for its worst sales in the Chinese market in years.

Chinese battery and electric vehicle companies BYD Also on top tesla Total vehicle production exceeded 3 million vehicles in 2023, and the company sold more battery-powered vehicles in the fourth quarter than any other U.S. automaker.

According to calculations from CNBC’s public data, BYD’s overseas sales in 2023 exceeded 242,000 new energy passenger cars. The company did not release comparable numbers for 2022.

Francoise Huang, senior economist at Allianz Trade, said Chinese automakers are likely to increase their share of the domestic car market to 75% by 2030.

If that happens, sales of European cars in China will fall by nearly 40%, he said.

As Chinese-made electric cars make their way to Europe, the European Union has launched an investigation into the role of government subsidies for the production of these cars.

“They will soon realize that they are targeting the wrong sector,” Guajardo said.

Made in China: “EVs are better than any other moving vehicle” [the Europeans] So we’re just trying to block something that’s better,” he said, adding that these electric vehicles won’t ultimately make up the bulk of China’s car exports.

Guajardo expects these developments will lead to a trade war, at least in the case of Chinese car sales to Mexico.

“I wish it was an EV, because not only is it better, but it’s a quality product that protects the environment,” Guajardo said. “Gasoline cars are just competition with Mexican products.”