In China, a vast number of gasoline-powered vehicles remain unsold while electric vehicles (EVs) increasingly replace them, a situation that is impacting emerging and secondary markets, according to a report from Reuters.
China is quickly shifting towards EVs, which now represent about fifty percent of the domestic market. This shift has, unsurprisingly, hurt traditional gasoline car sales, leading to a surplus of unsold vehicles that are now finding their way into international markets.
As Reuters pointed out, while Western countries impose tariffs to protect their markets and focus on the challenge posed by heavily subsidized Chinese EVs, automakers from the U.S. and Europe face escalating competition—from places like Poland to Uruguay—from China’s major gasoline consumers.
Data from AutoMobility, a consultancy based in China, reveals that since 2020, gasoline-fueled cars made up 76% of China’s automotive exports, skyrocketing from one million vehicles annually to over 6.5 million this year.
The boom in auto exports has largely stemmed from the same subsidies and policies that undermined brands like VW, GM, and Nissan in China, consequently igniting a fierce price war. Several state-owned companies, such as SAIC Motor and Changan Motor, are now leading the charge as top exporters of these surplus vehicles.
This situation emphasizes how China’s industrial policies are shifting markets, posing challenges for foreign competitors who are struggling to keep up with state-backed companies that aim to dominate key industries both domestically and internationally.
Interestingly, while gasoline car sales remain strong in “second-tier” markets—like parts of Eastern Europe, Latin America, and Africa—due to less developed EV charging infrastructure, the long-term vision of the Chinese government remains centered on mastering the market for domestic EVs and hybrids. In the meantime, many Chinese brands seem to be focusing on meeting global demand by offering diverse options.
However, the increasing influx of unsold Chinese vehicles is leading to stiff competition and exerting pressure on global automakers. Traditional brands like Fiat, Ford, and Chevrolet are particularly feeling the heat, especially in Mexico, which happens to be China’s largest export market and is situated not far from the U.S.
U.S. officials have been urging Mexico to limit trade with China, aiming to prevent it from being a “backdoor” for circumventing U.S. trade restrictions. This led Mexico to increase tariffs on Chinese vehicles from twenty percent to fifty percent in September.
Notably, Chinese company Chery saw its exports of gasoline-powered cars rise impressively—from 730,000 in 2020 to an anticipated 2.6 million in 2024. Dongfeng also experienced a nearly fourfold growth over the same period, indicating a potential shift in market dynamics. According to Gjelte Bernoulli, the company’s Central Europe manager, this surge is significant, especially given the downturn faced by its Chinese partnerships with Honda and Nissan.
Vernoy commented on the situation: “Being state-owned is a crucial factor. There’s no doubt we will endure.”
