Chinese Automakers Shift Focus to Exporting Gasoline Cars as Domestic Demand Cools
BRATISLAVA, slovakia – Facing a saturated domestic market and a rapid transition to electric vehicles within China, its automotive manufacturers are increasingly turning to international exports, particularly of gasoline-powered vehicles, aggressively targeting developing nations and challenging established automakers.Within five years, Chinese brands could control approximately 30 percent of the global auto market, fueled by growth in China and significant gains in South America, the Middle East, Africa, and Southeast Asia.
This export push comes as Chinese automakers find themselves with excess production capacity for internal combustion engine (ICE) vehicles, a outcome of government policies promoting electric vehicle adoption at home. While China leads the world in EV sales, demand for conventional gasoline cars is waning, prompting manufacturers to seek opportunities abroad where ICE vehicles remain popular and more affordable. The strategy is reshaping automotive markets worldwide, creating both opportunities and anxieties for established players.
Poland exemplifies this expansion in Europe, with 33 Chinese brands having entered or planning to enter the market as of 2023, largely focusing on gasoline SUVs. Local managers describe the influx as “crazy,” emphasizing the need for deep market understanding to survive. Simultaneously, the most intense competition isn’t occurring in developed nations, but in developing countries where global automakers have traditionally offered older, cheaper models. Chinese brands are now competing with more modern equipment and software.
In Mexico,China’s largest export market,Chinese brands are projected to surpass 200,000 cars sold this year,capturing roughly 14 percent of the market share. This surge is occurring as Chevrolet sales are expected to decline by over 24 percent. In response, Mexico has increased tariffs on Chinese cars from 20 to 50 percent, even amidst pressure from the United States concerned about circumventing its own trade barriers.
South Africa has also seen a significant increase in Chinese brand market share, rising from 10 to nearly 16 percent in the first half of the year, with almost 30,000 gasoline cars sold. Chile presents a similar trend, with Chinese brands holding almost a third of the market – selling over 25,000 combustion engine cars while Chevrolet, Nissan, and VW experienced substantial sales declines. While Chinese brands have sold fewer than 1,000 electric cars in Chile during the same period, the focus remains firmly on exporting gasoline-powered vehicles to regions with continued demand.
According to JATO Dynamics analyst Felipe Munoz, this dynamic represents a “real battle” between Chinese manufacturers and traditional brands, primarily unfolding in developing economies. The Chinese are leveraging their technological advancements and competitive pricing to gain a foothold in markets previously dominated by established automakers.