The Tide of Chinese Auto Exports Needs to Change: From "Racing for Sales" to "Upholding Rules" | Qi Shi

In the first half of this year, Chinese automakers simultaneously reached three historical milestones — single-month exports broke the 1 million mark for the first time, sales in Europe exceeded Japanese brands for the first time, and the EU's final anti-subsidy duty case on PHEVs came into effect. The "highlights" of scale and the "reefs" of rules appeared simultaneously. This is not the end of the overseas expansion story, but the watershed moment shifting from "fighting for incremental growth" to "upholding rules".

Production and sales data for June disclosed by the China Association of Automobile Manufacturers on July 9 showed that June car exports reached 1.037 million vehicles, a 11.6% month-on-month increase and a 75.1% year-on-year increase, the first time in China's automobile industry history that single-month exports exceeded 1 million. From January to June, cumulative exports reached 5.096 million vehicles, a 65.3% year-on-year increase. Chen Shihua, Deputy Secretary-General of CAAM, was very confident in his judgment — full-year car exports are expected to break 10 million. This means China is becoming the first country in the world to break 10 million in annual export volume.

More worth noting than the numbers is the structure behind them. Data released by the Liaison Committee on Passenger Cars on the same day showed that June new energy passenger car exports were 499,000 vehicles, a 152.7% year-on-year increase, accounting for 56.9% of passenger car exports, nearly 16 percentage points higher than last year. The main force of Chinese car overseas expansion has shifted from early oil car surplus capacity to new energy regular army.

The significance of exports to leading automakers is also changing. BYD first half sales 1.8085 million, of which 790,000 were exports, accounting for nearly 44%; Chery first half exports 940,000, accounting for 74.3% of its total sales. For these two, overseas markets are no longer supplementary, but the main battlefield.

Worth mentioning separately is the joint venture camp. June joint venture and luxury brand exports 114,000 vehicles, a 61% year-on-year increase. Foreign brands such as Volkswagen, Toyota, and Nissan are treating Chinese factories as global electrification supply centers, exporting back to Europe and Southeast Asian markets.

Breaking 1 million is just a footnote on quantity. The true turning point is in Europe.

In May this year, five Chinese automakers — BYD, SAIC, Geely, Chery, and Leapmotor — sold a combined 138,400 vehicles in 31 European countries, a 65% year-on-year increase, exceeding the combined sales of six Japanese brands including Toyota in the region for the first time. Chinese brand European market share rose from 5.6% in May 2025 to 10.7% in May 2026 — doubling in one year.

The weight of this reversal is not light. Japanese brands have cultivated Europe for over 40 years, while Chinese brands have entered Europe on a large scale for less than 5 years, completing share switches that once took a generation. This is a rare restructuring of patterns in the European car market since World War II. Mercedes-Benz's Q2 data released in the same period formed a contrast — global sales down 6%, China market down 30%, while pure electric models grew 50% globally. Between one advance and one retreat, the center of gravity of the global auto industry is being reweighed.

But Europe will not sit idly while share is taken away. The EU's final anti-subsidy duties on Chinese-made pure electric vehicles officially took effect from October 2024, for five years; the EU summit in June 2026 also finalized the anti-subsidy duty case on Chinese plug-in hybrid vehicles. This means the PHEV export route to which Chinese automakers collectively added efforts over the past year has also had its threshold raised directly.

The killing power of this tariff wall does not lie in uniform pressure, but in stratification: BYD comprehensive tax rate 27%, Geely 28.8%, NIO and XPeng 30.7%, SAIC highest 45.3%, while Tesla produced locally in Shanghai only 7.8% early on. Cooperating with the EU investigation and enterprises with higher localization have relatively lower tax rates; enterprises that did not cooperate were pushed to the top. The rules themselves favor the leading players and those with higher localization; small players will be squeezed out. The Chinese "Oil car — PHEV transition — Pure electric upgrade" three-step overseas expansion path may also be compressed to two steps.

In response, China's Ministry of Commerce has made a final anti-dumping ruling on pork products originating from the EU, levying tariffs of 4.9% to 19.8% for five years, and is preparing further countermeasures on products such as brandy and dairy products. Both sides are using agricultural products and light industrial products as chips — precisely controlling, avoiding complete loss of control — but this is the beginning of a long game.

Once tariffs land, localization is no longer a choice. The current three leading Chinese automakers have given three solutions.

BYD Model: Local Heavy Assets. Hungary factory under construction, expected to start production in 2027, completing the production and sales loop directly within the EU. This road is most resistant to tariffs, but investment cycle is long and political sensitivity is high, requiring enterprises to have sufficient patience and cash flow to support.

Chery Model: Third Country Jumping Board. Chery has already set up a factory in Brazil, and on the Europe side, layout in Spain. Using a non-EU or EU-edge market as a jumping board, balancing Latin American growth and Europe entry, high flexibility, but relies on the long-term stability of the host country's policies.

SAIC Model: Deep Cultivation in Multiple Markets, Localization Advancing Together. SAIC is the most complete among the three in organized and systematic overseas expansion, Europe is its core battlefield — MG has been the sales champion of Chinese brands in Europe for 11 consecutive years, cumulative sales broken 1 million vehicles. Its response logic is "Full Spectrum + Localization" walking on two legs: Europe supplies fuel, hybrid, plug-in hybrid, and pure electric simultaneously, avoiding single path policy risks; Spain factory production end of 2028 can directly avoid high tariffs within the EU; Thailand, Indonesia factories mass produced, as the radiation base for Southeast Asia, Aus/NZ, S.America. Highest risk dispersion, but also the highest requirement on global synergy capability.

I lived in Thailand for three years, and I could clearly feel the texture of this road. MG stores opened from Bangkok city center all the way to Chiang Mai old town. Southeast Asia is not an alternative to Europe, but another battlefield outside Europe. The scale base formed by Chinese automakers in Southeast Asia will become the reserve hand for the next round of global games.

Need to remind that EU tariffs are just "the first wall". North America's potential blockage risk, Southeast Asia Japanese brands' counterattack, are all on the way.

Breaking 1 million is an "adult ceremony" for China's automobile industry. But after the adult ceremony, one must face the rules of the adult world — anti-subsidy, anti-dumping, localization, labor compliance, and environmental regulations. Victory in data can be completed within a few months, but victory in rules may take decades.

10 million is not the end, but the starting line for Chinese automakers from "selling cars" to "operating globally". Whether one can stand, stay, and go far, the answer is not in the CAAM data, but in the assembly lines of Hungary factories, in the taillights of Chinese cars in Munich evening rush hour, and also in the account books of Lisbon dealers.