China Overtakes Japan As The World’s Biggest Exporter Of Passenger Cars

According to reports, China is now the world’s biggest exporter of cars. Credit tariffs, the war in Ukraine, and the changing automotive landscape that have positively affected the country’s car production.

Chinese officials have released figures showing the country exported 1.07 million cars during the first three months of 2023, an increase of 58 percent compared to last year. That number pushes Japan, with 954,185 cars, to second place despite increasing its production by more than 6 percent in the same period. Germany, which previously held the second spot for passenger car exports, was surpassed by China last year — it now sits in third.

China’s rise in vehicle production is due to increased global demand for new energy vehicles (NEVs) as countries enact legislation limiting fossil fuel (combustion) vehicles and their emissions. The Asian nation is well-positioned to accommodate the demand. According to an International Energy Agency report released in July 2022, China produces 75 percent of the world’s lithium-ion batteries and holds 85 percent production capacity for anodes and 70 percent for cathodes. The report says that China’s first-quarter exports of NEVs, including electric cars, rose more than 90 percent compared to a year ago.

The war in Ukraine has also helped China’s exports. Western countries have imposed trade sanctions on Moscow, so the Russian government has turned to China for its vehicles. While Volkswagen and Toyota pulled out of Russia after the Ukraine invasion, Chinese carmakers Great Wall, Chery, and Geely — satisfying the new demand — enjoyed a market share jump.

Other automakers, such as Tesla, are benefitting as well. Elon Musk’s electric car company has a massive Shanghai manufacturing plant that sends cars to Europe and Japan — the Gigafactory is currently capable of making 1.25 million vehicles a year and has plans to increase capacity. While Chinese-built Teslas still aren’t being imported into the United States, last month, the company began making Model Y sport utility vehicles for export to Canada.

SAIC Motor, the Chinese state-owned automaker based in Shanghai (which owns the MG brand), and BYD Auto Co., Ltd., an automotive subsidiary of the publicly listed Chinese multinational manufacturer BYD Company (backed by US investor Warren Buffett), are some of China’s top exporters of NEVs.

It’s interesting to note that import tariffs, legislated by the US government, have prevented most, but not all, automakers from bringing Chinese cars into the US marketplace. However, tariffs have not stopped GM from selling its Buick Envision SUV (based price of about $35,000) in the US market. Last year, GM imported 36,407 made-in-China vehicles, with the majority being the aforementioned Buick SUV. The balance was brought in by Polestar and Volvo brands.

Don’t get the impression that China is throttling back its manufacturing capabilities. On the contrary, Xu Haidong, the deputy chief engineer at the state-backed China Association of Automobile Manufacturers, has indicated that China’s target is to export a staggering 8 million passenger vehicles by 2030!