Can Exports Save 2026 Car Sales, But What About 2027?

Data released by CPCA for September sales shows that retail sales in the passenger car market for September 2026 were 1.631 million units, a year-over-year decrease of 28.1%; even the new energy vehicle market that has always been growing rapidly saw a significant drop, with September NEV retail volume reaching only 1.084 million units, a year-over-year decrease of 16.7%.

Cumulative sales from January to September were 13.457 million units, a 21.9% decline compared to the 17.225 million units in the same period last year, with the absolute decline exceeding 3.8 million units. Meanwhile, new energy vehicles also declined by 12.8% in the first nine months, selling approximately 7.75 million units.

However, if only looking at wholesale data announced by automakers, it seems the Chinese automotive industry is not so "sluggish". According to September data, sales for brands like BYD, Geely, Chery, and Leapmotor all saw year-over-year increases, even reaching record highs. The "gap" here lies in export sales.

CPCA statistics show that Chinese automakers achieved 923,000 units in single-month exports for September, a year-over-year increase of 73.2%; domestic exports for the first nine months totaled 7.067 million units, a year-over-year increase of 75.2%. Moreover, the largest part of export growth was new energy vehicles. In September, NEV exports reached 558,000 units, with a year-over-year growth rate of 163.5%, while growth for January-September reached 3.887 million units, with an absolute increase of 1.2 million units.

01

Export Momentum Is Really Strong

The 3 million units of export growth basically filled the gap from the domestic market decline. To some extent, since the second half of this year, automakers have accelerated exports to overseas markets, equivalent to releasing domestic production capacity to overseas markets to avoid excess capacity.

Taking Chery Group as an example, Chery Group's exports reached 207,800 units in September, creating a new high for a single month's exports by Chinese automakers. In June, July, and August before this, Chery Group's exports also reached 191,000 units, 202,500 units, and 197,000 units respectively, almost sticking to exporting 200,000 units overseas, and as of September, Chery Group's annual export volume has reached over 1.55 million units.

BYD's export volume in the third quarter was also very considerable, reaching 180,000 units in July, nearly 190,000 units in August, and maintaining 180,000 units in September. It is expected that BYD's exports this year will also be around 1.5 million units, equally strong.

In terms of exports, Geely Automobile grew the fastest, with exports around 200,000 units in the first quarter, while by the third quarter this number had increased by more than 50%, exceeding 320,000 units. In addition, Leapmotor became the new force brand with the highest exports, with export data reaching around 160,000 units so far this year.

According to Jiasipai statistics, total sales of all Chinese brands in Europe's major markets (EU27 + European Free Trade Association + UK) for the first eight months of this year were approximately 864,000 units. The UK market alone reached 202,500 units. Sales in the five Southeast Asian countries during the same period were 293,000 units, and Australia had around 257,000 units. Additionally, sales in regional markets such as Mexico, Argentina, Brazil, and Uruguay were also very strong.

Jiasipai statistics showed sales performance of Chinese brands in 39 countries and regions. Among them, Chinese brands entered the top three in 11 countries and regions, and Chinese brands were present in the top ten car brands in 22 countries and regions. Additionally, the market share of Chinese brands exceeded 30% in Uruguay, Israel, Australia, Thailand, and Chile, with the share in Uruguay reaching as high as 57.6%. If we include joint ventures between Chinese brands and Russian local enterprises, the market share in Russia also exceeded 30%.

However, it is worth noting that the current 7 million units of Chinese automaker exports are not actually terminal sales truly realized in overseas markets, but rather the customs declaration perspective of automaker exports. In other words, 7 million units is a wholesale volume to overseas markets. It does not mean overseas markets can truly digest this sales volume; some may still be in ports and at sea, and it will take some time to truly convert into sales.

At the Paris Motor Show that just opened, nearly 20 Chinese complete vehicle brands participated, accounting for one-third of the total participating brands at the Paris Motor Show, and the scale of participation has expanded significantly compared to two years ago. It is worth knowing that even BMW did not participate in this Paris Motor Show, while some Japanese automakers such as Nissan, Suzuki, and Mitsubishi also absented themselves.

This "taking the lead" approach of Chinese brands made European media both excited and concerned. An article in Reuters wrote: "Like other Western motor shows, the Paris Motor Show has been in a state of decline until Chinese car manufacturers began to participate on a large scale four years ago."

02

Tariff Barriers and Trust Scrutiny

It is precisely because Chinese brands are rapidly "conquering" overseas markets that Chinese automakers have started to encounter more obstacles.

In 2024, the EU imposed countervailing duties on Chinese-made pure electric vehicles—added on top of the original 10% tariff, with the rate reaching up to about 35%, but hybrid models became a "gap", resulting in a significant growth in exports of Chinese brand plug-in hybrid models to the EU. After the conclusion of the second regular meeting of the China-EU Trade and Investment Consultation Mechanism recently, one of the results was that "both sides reached an understanding on hybrid vehicle trade in a manner consistent with World Trade Organization rules."

Although neither the China-EU side has revealed specific details about the reached memorandum of understanding, according to Maroš Šefčovič, EU Commissioner for Trade and Economic Security, new measures will reduce the number of hybrid vehicles imported from China by more than half, but this data is based on trade flow and forecasts for the next four years. According to Bloomberg, the quota for hybrid models exported from China may be around 350,000 units, which is indeed close to half of the previously stated figure.

At the same time, the Chinese side has made corresponding arrangements, one of which is "effective from April 1, 2027, the export VAT refund rate for new energy vehicles will be lowered from 13% to 9%." This means that the export profitability of Chinese automakers will be further compressed, and in a certain sense, it restricts the export of new energy vehicles.

More critically, products of Chinese automakers are facing stricter inspection by overseas regulatory authorities.

On October 6, a black Chery OMODA 5 in Malaysia broke its rear axle while driving, causing the wheels on both sides to detach together, luckily no one was injured.

Soon, on October 11, the Malaysia Land Transport Authority (JPJ) announced it would revoke relevant certificates and suspend the registration of new Chery OMODA 5 vehicles. Not only did it stop registration, but relevant Malaysian departments also required Chery to identify risky vehicles according to part numbers, production batches, VIN, and other information; to inspect complete vehicle production and assembly, as well as rear axle parts suppliers; and to verify production quality control, welding joint inspection procedures, and parts safety requirements. The Malaysian JPJ emphasized that only after completing corrective and preventive actions and having the risks properly controlled with JPJ technical confirmation will the suspension of registration measures be lifted.

Chery Automobile also announced the launch of a recall for the affected 8,878 OMODA 5 units to inspect relevant parts and replace them for free as appropriate. At the same time, Chery Automobile also emphasized that it would conduct a special risk investigation for the same batch of OMODA 5 models in domestic and relevant markets.

Of course, the above two cases are just typical examples of Chinese automakers facing obstacles in overseas markets in recent years. Previously, there were also cases such as the Australian Automotive Service and Repair Regulatory Agency (AASRA) issuing compliance warnings to five Chinese new energy automakers, and there were also requirements in places such as Turkey and Thailand for Chinese automakers exporting to local markets to build factories.

In the European market, the significant increase in sales by Chinese automakers has also attracted scrutiny from various parties. Reuters quoted François Roudier, Secretary General of the International Organization of Motor Vehicle Manufacturers, saying: "If they give up exports in Europe, they will die, because they cannot make money elsewhere."

Evidently, European media believe that due to the de facto closure of the US market to the Chinese automotive industry, Europe has become the primary priority market for Chinese automakers, which makes Chinese automakers consider further expanding their market share—some media expect the market share of Chinese automakers in Europe to reach 12% this year and 20% by 2030.

Therefore, for Chinese automakers, they cannot simply "shift sales volume" to overseas markets just because domestic market sales are declining. If the environment and capacity of overseas markets are not carefully considered, and the volume exceeding one-third of Chinese automotive production capacity is placed overseas, this will inevitably trigger "reactive measures" from other countries towards Chinese automakers and will directly create greater obstacles for Chinese automakers in overseas markets.

03

Export Peak Is Coming

Since restrictions on direct domestic exports are continuously increasing, Chinese automakers are also considering building factories locally more and more.

Leapmotor has started production at the Stellantis Spain factory starting in October and is fully prepared for overseas localization production.

BYD plans to start production at the new factory in Hungary in the fourth quarter. BYD Executive Vice President Li Ke became the focus of this Paris Motor Show. In interviews with multiple European media outlets, she revealed that BYD's commitment to Europe is "very deep".

For Geely, the plan to acquire Ford's Spanish factory has been officially approved. Geely will invest €221 million to acquire 34% equity of Ford España, S.L. Afterwards, Ford and Geely will establish a joint venture company to operate the factory together. Geely Automobile plans to produce two pure electric vehicle models at this factory: one may be the EX2, which is the domestic Xingyuan. At the same time, both parties will have a cooperative model—a new Crossover model led by Ford's design and jointly developed by Geely.

Additionally, SAIC Group's first factory in Europe has been confirmed to be located in Spain, planned to start construction in 2027 and start production at the end of 2028, mainly producing MG brand pure electric models. Chery Automobile and the Spanish car company Ebro-EV Motors joint venture company started production earlier this year, allowing Chery to achieve localized production in Europe.

Actually, localized production has become the consensus among Chinese top automakers, after all, high tariffs are difficult for them to bear for a long time, and landing production of pure electric models in Europe is also a path to avoid traditional European automakers.

And with Chinese automakers landing in Europe, the domestic new energy vehicle supply chain will also start its localization process in Europe. The new cell factory of CATL Debrecen in Hungary officially started production, with an annual planned capacity reaching 100GWh, capable of supporting pure electric vehicle models on a million-unit level.

If we follow European media forecasts—if the market share of Chinese brands in the European market reaches over 12% in 2026, then the annual sales of Chinese automakers in Europe in the coming years will be at least over 1.2 million units. After deducting the export quota for hybrid models, the scale of localization can reach around 900,000 units.

From this inference, it is highly likely that Chinese automakers will also land to build factories in other regional overseas markets, including Southeast Asia, Mexico, South America, etc. This makes the nearly 10 million unit level of exports in China in 2026 highly likely to be a peak, afterwards it may stabilize around 6-7 million units. Adding the domestic market, the domestic production capacity demand for China's automotive industry is also in the 20-23 million units range.

Currently, the passenger car production capacity of Chinese automakers is at least 30 million units in scale, which means capacity reduction for domestic automakers is inevitable and must be completed as soon as possible.

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