Within a short timeframe, Chinese automakers have surpassed Japanese manufacturers as the leading global sellers of automobiles, according to figures compiled by Nikkei using automaker disclosures and S&P Global Mobility data.
The study found that global sales of Chinese vehicles are projected to increase by 17% in 2025 to ~27 million units, although nearly three-quarters of that is attributed to sales domestically thanks to heavy promotion of electric vehicles and plug-in hybrids.
By comparison, global sales for Japanese vehicles are expected to remain flat in 2025 at ~25 million as China erases Japan’s lead of 8 million units in the global auto market in under three years.
The U.S. is expected to have sold ~16.3 million units worldwide in 2025, the best year since 2019.
And while tariffs are taking a bite out of the sale of Chinese EVs in Europe, automakers are ramping up production of tariff-exempt hybrids to compensate for the drop in EV sales.
Chinese imports are also gaining in popularity in countries where Japan typically dominated. In most Southeast Asian countries, Chinese auto sales are expected to increase by as much as 49% including Thailand, a major importer of Japanese vehicles. Japanese vehicles are now expected to account for 69% of all new vehicle sales in Thailand, down from 90% in 2020.
What fueled this breakneck growth in such a short time? According to study conducted by the MIT Technology Review in 2023, the explosion of Chinese EVs in the global automobile market can be attributed to Beijing’s aggressive investment in battery technology to make cheaper EVs to compete with the automobile powerhouses of the U.S., Japan, and Germany, eventually taking a “significant slice of the auto industry.”
Domestically, Beijing’s policies resulted in an explosion of EVs across the country. By providing companies that made electric buses and taxis incentives to make personal automobiles, China’s $29B investment led Chinese-made EVs to comprise over half of global EV sales. To further encourage EV sales within the country, the government waived the rationing of license plates for individuals who purchased EVs.
This led to the emergence of companies like BYD (BYDDF) (BYDDY), Wuling, Li Auto (LI), NIO (NIO), and Geely (GELYF) (GELHY), all of which dominated the EV market in China while gaining significant ground across Asia and Europe.
On the ICE front, Chinese cars made by SAIC Motor (which now owns the iconic British MG), Jaecoo, and Leapmotor are also driving rapid growth of Chinse-made automobile adoption overseas thanks to competitive pricing, advanced technology, and strategic production to avoid EU tariffs.
Related tickers: Invesco Global Dragon China ETF (HUMN), VanEck Low Carbon Energy ETF (SMOG), State Street SPDR S&P Kensho Smart Mobility ETF (HAIL), Great Wall Motor Company (GWLLF)