China’s vehicle export growth is expected to slow down to 5.8% this year, reaching 6.2 million units, according to data from the China Association of Automobile Manufacturers (CAAM). This marks a significant deceleration from the 19.3% surge experienced in 2024. The forecasted slowdown is set against the backdrop of a modest rise in vehicle sales within China, where policy incentives are anticipated to drive demand.
The slowing export growth can be attributed to a number of factors, including the impact of European Union tariffs on Chinese-made electric vehicles (EVs). Last year, exports of EVs fell by 10.4%, in contrast to the 80.9% rise seen in 2023. On the other hand, exports of plug-in hybrid vehicles (PHEVs) soared by 190% as automakers pivoted towards these models in response to the higher tariffs on EVs.
In response to the EU’s additional tariffs, China has advised its automotive manufacturers to reduce significant investments in European nations that endorse these levies on Chinese EVs. Concurrently, Chinese automakers are adapting their strategies by focusing on hybrid exports to Europe as a countermeasure to the heightened EV tariffs.
Vehicle sales in China are expected to increase by 4.7% to 32.9 million units this year, following a 4.5% increase in 2024, as per CAAM data. However, the association forecasts a deceleration in sales growth for new energy vehicles (NEVs), including EVs and PHEVs, to 24.4% in 2025 from 35.5% in the previous year.
CAAM official Xu Haidong highlighted that the extension of auto trade-in subsidies into 2025 is likely to be a significant driver of growth. However, he also pointed out that weak domestic demand, intense competition, and escalating external pressures could have adverse impacts on the automotive market.
Overall, Chinese automakers are navigating challenges in the global market by adapting their strategies and focusing on hybrid exports to Europe amidst changing trade dynamics and policy incentives.
