Expanding automotive market globally accommodates surging demand for Chinese-made vehicles

China's Auto Exports Surge Amid Global Shifts

China's auto industry is making significant strides in expanding its global presence, with a preliminary strategic agreement signed with the Zhejiang Provincial Seaport Investment and Operation Group aiming to connect China's carmakers with markets in the Middle East, Central Asia, and Africa.

Under this agreement, the parties will explore connecting ocean and inland rail routes through the Trans-Caspian International Transport Route. This move is part of a larger trend of Chinese OEMs investing heavily in expanding their fleets of ro-ro car carriers, aiming to handle increasing vehicle exports without relying on fluctuating third-party resource availability.

The growth in China's auto exports is particularly notable in the new energy vehicle (NEV) sector, with sales in this segment jumping by 41% compared with the previous year. This surge is driving the overall trend, as Chinese manufacturers are projected to continue steadily growing their market share, with annual sales potentially surpassing one million units by 2028.

By 2030, Alix Partners expects that over 30% of vehicles sold globally will be of Chinese brands, compared to only 21% in 2024.

However, the journey hasn't been without challenges. European uptake for Chinese models has been slower than some Chinese OEMs expected, leading to missed port calls in Bremerhaven, Germany. Similarly, Chinese manufacturers experienced a decline in deliveries to certain destinations, primarily Russia, in the first quarter of 2025 due to higher excise rate duties and general economic turbulence.

Despite these hurdles, China's auto exports gained steam, with Russia and the Middle East accounting for 35% of China-origin vehicle exports in 2024, surpassing combined shipments to Europe and North America for the first time.

The trend of localizing capacities in key targeted markets is becoming increasingly important for Chinese OEMs. This strategy allows them to evade import tariffs via production in countries that the EU has Free Trade Agreements with. Morocco, which became the largest exporter of finished vehicles to Europe in 2023, saw a 4% decline in sales year-on-year in the first five months of 2025.

The EU may take extra measures against production in adjacent markets, such as transshipment measures against such countries or minimum value add requirements. Nevertheless, the rise in China's vehicle exports is putting additional pressure on export logistics, prompting Chinese OEMs to consider localizing capacities in key targeted markets sooner rather than later.

Notably, the Chinese OEM BYD is expanding its production capacities in Europe and has overtaken Tesla in electric vehicle sales in the European market. It is expected to strengthen its presence further in the next two years.

None of the alternative routes, including the Trans-Caspian route, have yet managed to become a vital alternative to maritime trade routes for Chinese vehicle exports. However, there is an expectation to see an uptake in the Mediterranean, with Italian port calls from China expected to increase in the future.

In the first half of 2025, China exported 3.48 million vehicles, a 18% increase compared to the same period in the previous year. As the auto industry continues to evolve, it will be interesting to see how these trends develop and shape the global automotive landscape.

Expanding automotive market globally accommodates surging demand for Chinese-made vehicles