LIANYUNGANG, CHINA – JANUARY 17, 2024 – A large amount of cars are prepared to be transported for export at the port of Lianyungang, Jiangsu province, China, January 17, 2024. Japanese customs data showed that the country exported 5.97 million vehicles last year, surpassing the 5.22 million vehicle exports reported by China customs data. The findings indicated that China was close to overtaking Japan as the top car exporter in 2023, despite falling just short.
According to the Ministry of Commerce, over 70% of China’s car exports in 2023 consisted of gasoline-powered vehicles, with new energy vehicle exports showing significant growth. It was noted that a large portion of gasoline-powered car exports went to Russia, with auto shipments to Russia increasing approximately sixfold in value terms from the previous year. Mexico was also a major destination for Chinese exports of gasoline-powered cars, while Belgium and the U.K. received mostly new energy vehicles.
Jorge Guajardo, a Washington, D.C.-based partner at Dentons Global Advisors and former ambassador of Mexico to China, highlighted the rapid increase in Chinese-made cars capturing a larger share of Mexico’s auto market. This trend is a new phenomenon, as Mexico has been traditionally protective of its auto industry.
The data revealed that China had a 40% penetration of new energy vehicles in new passenger car sales by the end of 2023, which was significantly higher than the approximately 7% in the U.S. The swift transition to electric cars was noted to be impacting international auto giants, with German automaker Volkswagen experiencing a decline in China market sales.
Furthermore, Chinese battery and electric car company BYD surpassed Tesla in overall vehicle production in 2023, producing over 3 million vehicles and selling more battery-powered cars than the U.S. automaker in the fourth quarter. The company’s overseas sales exceeded 242,000 new energy passenger vehicles in 2023.
Francoise Huang, a senior economist at Allianz Trade, predicted that Chinese car makers are expected to expand their share of the domestic auto market to 75% by 2030, resulting in a nearly 40% drop in European car sales in China. As China-made electric cars also enter the European market, the European Union has initiated an investigation into government subsidies for the production of these electric vehicles. Despite this, there is concern that targeting the electric vehicle sector could lead to trade disputes.
Guajardo expressed the view that the situation might lead to trade wars, particularly in the case of Chinese car sales to Mexico. He emphasized the superiority of Chinese-made electric vehicles and noted that they are a high-quality product that benefits the environment, contrasting them with gasoline-powered cars, which are seen as competing with Mexican products.
