China Exports Surge Gasoline Cars to Global Markets
Chinese automakers have ramped up exports of internal combustion engine vehicles as domestic demand for gasoline models plummets amid the rise of electric vehicles. Fossil-fuel cars now comprise 76 percent of China’s auto exports since 2020, propelling the country to become the world’s largest auto exporter by volume last year. Annual shipments have escalated from 1 million units to over 6.5 million this year, with gasoline vehicles projected to exceed 4.3 million exports, accounting for nearly two-thirds of the total.
This export boom stems from excess production capacity in China’s gasoline vehicle sector, where factories idled by the EV transition hold enough output for 20 to 30 million vehicles annually. At home, electric vehicles captured half the market in recent years, squeezing sales from legacy gasoline producers. State support enables these firms to pivot aggressively overseas, undercutting competitors with lower-priced offerings tailored to local preferences.
Emerging markets bear the brunt of this influx, particularly in Latin America, Africa, and Eastern Europe. In Mexico, Chinese brands sold over 200,000 units this year, securing 14 percent market share and eroding positions held by established players like Chevrolet, whose sales dropped 17 percent to 57,292 units. South Africa saw Chinese gasoline vehicles claim 16 percent of the first-half market, up from 10 percent, contributing to a 15 percent decline in Toyota sales to 93,805 vehicles. In Chile, these imports captured nearly one-third of the market, with over 25,000 units sold in the first half alone.
The strategy exploits second-tier markets where U.S. and European automakers maintain strong footholds but face affordability pressures. Poland welcomed over 30 Chinese brands since 2023, mostly gasoline models, while Russia absorbed about 900,000 such vehicles in 2024 before import fees doubled to $7,500 per unit. Uruguay and other South American nations report similar penetration, with Chinese exports now dominating segments once led by Fiat, Ford, Nissan, and Volkswagen.
For the U.S. automotive industry, the ripple effects intensify through North American supply chains. Mexico’s growing reliance on Chinese imports raises alarms over potential transshipment routes that could bypass U.S. trade barriers prohibiting direct Chinese vehicle sales on national security grounds. In response, Mexico hiked tariffs on these imports to 50 percent this year to safeguard local jobs and assembly operations tied to American manufacturers. General Motors stated it aims to counter Chinese rivals “with the right technology, at the right cost,” while industry analysts forecast Chinese automakers adding 4 million annual sales outside China by 2030, primarily at the expense of legacy brands in emerging regions.
Experts highlight the competitive imbalance created by China’s state-backed model. Jelte Vernooij, manager at Dongfeng Central Europe, noted, “The fact that we’re state-owned is key… There’s no question that we will survive.” Bill Russo, CEO of Automobility, observed that “excess capacity is being aimed back at the rest of the world.” Felipe Munoz, an auto analyst at JATO Dynamics, warned, “Legacy automakers were sleeping. Now they’re paying for it… The real battle… is happening in emerging markets.”
Stellantis CEO Antonio Filosa emphasized adapting by focusing on locally built vehicles in contested areas like the Middle East and Africa. Volkswagen’s South America chief Alexander Seitz expressed confidence, stating, “I have no fear of the Chinese… They’re welcome to join the party.” Yet, Stephen Dyer, joint head of AlixPartners in China, predicted sustained pressure, saying, “That growth will come at the expense of everyone else.”
This export wave underscores broader tensions in global trade, where Chinese overcapacity in traditional powertrains collides with the industry’s electrification push. U.S. producers, already navigating domestic EV incentives and tariff uncertainties, must recalibrate strategies to maintain influence in interconnected markets south of the border. As Chinese firms like Chery and Changan fine-tune gasoline lineups for export—nearly all Chery sales in Australia remain internal combustion—the dynamics favor volume over immediate profitability, reshaping competitive landscapes far beyond China’s borders.
