China’s passenger car exports rose 64% in September from September 2025, an industry association reported on Monday. Chinese automakers are increasingly focusing on exports amid sluggish domestic sales. In September, China exported about 919,000 passenger vehicles, driven by demand for plug-in hybrids and electric vehicles.
In the first nine months of 2026, China exported more than 7.1 million passenger cars, up more than 70% from the previous year. In contrast, domestic sales fell 27% year-on-year in September to over 1.6 million units, driven by weakened consumer confidence and reduced government subsidies.
Despite being the world’s largest vehicle exporter, China faces scepticism from trade partners concerned about its impact on local industries. The European Union is capping imports of Chinese hybrid vehicles at 350,000 per year.
Chinese car sales grow in regions including Europe
In recent months, Chinese automakers have targeted growth in international markets, including Europe, Latin America, Southeast Asia, and Africa. Canada is also opening up to Chinese EV exports under a new tariff agreement. Analysts like Stephen Chan from S&P Global Ratings note that the industry is relying more on overseas sales to offset weaknesses in the domestic market. Consultancy AlixPartners predicts that Chinese automakers may export nearly 10 million vehicles globally by 2026. In Europe, they compete effectively by offering lower production costs; for example, a Chinese EV costs about $20,000 to produce, compared with around $31,000 for a European counterpart.
EU to cap Chinese hybrid vehicle imports at 350,000 annually
The EU has imposed higher tariffs on pure electric vehicles from China, prompting Chinese manufacturers to export more hybrid vehicles. A Deutsche Bank research note indicates that in August, Chinese automakers captured about 12% of Europe’s new car market, accounting for one in four hybrid sales.
To address concerns about trade imbalances, EU trade chief Maroš Šefčovič announced an interim agreement that could halve Chinese hybrid vehicle exports to the EU. This agreement establishes an annual import quota of 350,000 hybrid vehicles from China, including plug-in hybrids. Customs authorities across the 27-nation bloc will monitor these imports and halt shipments once the quota is reached, starting as early as December. This limit excludes cars made in Europe by Chinese companies.
Analysts warn that these protectionist measures may hinder Chinese automakers’ growth in Europe. Xiao Feng from CITIC CLSA noted that companies like BYD may struggle to export cars amid tariffs and political resistance. BYD’s executive vice president, Stella Li, acknowledged that geopolitics pose significant challenges to their expansion. To adapt, BYD is establishing production plants in Thailand, Indonesia, Brazil, and Hungary.
More overseas production limits impact from trade curbs
Chinese automakers are expected to expand overseas production to minimise tariff exposure, according to Ming Lee of BofA Global Research. He noted that more production will be localised. Meanwhile, high tariffs have effectively barred Chinese electric vehicles (EVs) from the US market. A recent meeting between President Donald Trump and Chinese leader Xi Jinping produced no agreement on this issue, and experts suggest ongoing political uncertainty makes the US market a lower priority for Chinese automakers.
This article used information from The Associated Press.
