In recent years, China's export strategy for petrol-fuelled vehicles has seen significant developments, marking a deliberate pivot towards markets beyond the traditional buyers in the United States and Europe. In 2024, according to Bloomberg, these exports surged almost 20 percent to 4.9 million units, a substantial increase from under one million vehicles sold in 2020. Data from the China Association of Automobile Manufacturers indicates that petrol-fuelled vehicles accounted for nearly 80 percent of the country's total vehicle exports, underscoring a crucial shift in manufacturing and sales dynamics.
The growth in exports is closely tied to Chinese carmakers navigating new markets where electric vehicle (EV) infrastructure is lagging. Many developing nations lack charging stations or stable electrical grids, making petrol cars a more feasible option. Reports indicate that Chinese manufacturers have adeptly seized the opportunity, filling the gap in underdeveloped markets that are unable to support the EV boom seen in more industrialized countries.
A forecast by US consultancy AlixPartners reveals that the global market share for Chinese automakers outside China is set to rise to 13 percent by 2030, a notable increase from just 3 percent in 2024. This shift is even more dramatic when considering the global market share, which could reach 33 percent with China included. The projections suggest that regions like Africa and the Middle East will witness a staggering 39 percent share of the market by 2030.
Examining some specific countries, the impact is clear. In South Africa, Chinese vehicles now represent about 10 percent of all new vehicle sales—an increase of fivefold since 2019. Similarly, in Turkey, Chinese brands captured 8 percent of the market in the first half of 2024, a significant uptick from nearly zero in 2022. In Chile, the influence of Chinese automobiles is even more pronounced, accounting for nearly a third of new vehicle sales consistently over the past few years.
Industry analysts attribute this rapid ascent in Chinese automotive exports to a combination of factors, including high quality and competitively priced vehicles. According to Abby Chun Tu, an auto research analyst at S&P Global Mobility, “Chinese automakers have pushed into lots of global markets with high quality and competitively priced vehicles. It’s the same strategy that worked for South Korean and Japanese brands, but they also have the advantage of advanced software and lots of features — even in their mass-market models.”
The effects of this increased competition are not lost on established automakers. At a recent Wolfe Research conference, Ford CEO Jim Farley remarked on the challenges posed by Chinese competitors in developing markets, admitting, “Our operations overseas are very fit, but the Chinese are coming to those markets now, globalizing the supply chain.” He noted that markets such as India and South America are being significantly influenced by Chinese electric vehicles.
Moreover, Ford has recently ceased vehicle production in Brazil, as its former factory has been acquired by BYD, a major Chinese automaker. Despite these challenges, Ford maintains a strong presence in other markets, including South Africa and Thailand, where it produces the Ranger ute—a staple of its global lineup. Farley emphasized the need for strategic thinking: “We have to think about future-proofing that.”
General Motors also views the growth of Chinese automobile manufacturers as a serious threat. GM’s CEO Mary Barra spoke to Bloomberg about collaborating with Chinese carmakers on specific products to enhance competitiveness in markets dominated by Chinese imports.
Meanwhile, the traditional giants of the automotive market, such as Toyota, have faced slow adaptation to changing policies, particularly in Thailand. Known as the “Detroit of Southeast Asia,” Thailand has adjusted its import taxes on EVs while providing buyer subsidies and tax breaks for investments in local plants. This change has seen Chinese brands increase their share of the Thai market from just 5.5 percent two years ago to 13.3 percent by the last quarter of 2024. However, the true revolution lies in the EV market, where China’s share has skyrocketed to 71 percent from just 22 percent in 2022.
Turning to Vietnam, the dynamics of trade relationships have also shifted significantly. The tariffs imposed during Donald Trump’s presidency initially benefitted Vietnam, but recent reports suggest that it could become a casualty of ongoing trade tensions. Vietnam's trade deficit with the United States surged to a staggering US$123 billion in 2024—three times its level in 2018. This poses serious questions about the long-term effects of US trade policy on Vietnam.
While Vietnam's trading relationship with the US has expanded, it has also been noted as a conduit for indirect Chinese exports to America. This involves a complex narrative surrounding tariff evasion through the rerouting of Chinese goods and extensive use of Chinese components in Vietnamese exports. Economists have pointed to this connection, arguing that the strong correlation between Vietnam's booming exports to the US and its rising imports from China highlights the interconnectedness of these economies.
Despite these critiques, many believe that Vietnam plays a vital role in diversifying global supply chains. Data from the Asian Development Bank shows that while 30 percent of Vietnam's imports from China are consumed domestically, significant portions also come from other countries providing components for exports. With exports to the rest of the world dramatically outpacing those to the US, Vietnam's broader economic picture appears more complex than simply being a backdoor for Chinese goods.
It’s noteworthy that the wholesale share of indirect Chinese content in Vietnam's exports to the United States has grown. This figure reached 28 percent in 2022, up from just 9 percent in 2018. Furthermore, although Chinese direct investment in Vietnam peaked at nearly US$12 billion in 2023, this figure fell to US$3.6 billion in 2024. Conversely, investments from other nations, particularly from South Korea, Taiwan, and Japan, have risen, reflecting a broader diversification in foreign investment as Vietnam seeks to solidify its standing in global trade.
In summary, while both China and Vietnam navigate the complexities of global trade, they illustrate how interdependence can shape policy and market dynamics. As the world becomes increasingly interconnected, monitoring these shifts will be crucial for predicting future trends in international trade and automotive markets.
