China’s electric-vehicle industry captured half its domestic market in just a few years, crushing sales of gasoline-powered vehicles from once-dominant global automakers.
But foreign players weren’t the only losers. Many Chinese legacy automakers also watched their sales collapse – and responded by flooding the world with fossil-fuel vehicles they couldn’t sell at home.
While Western policymakers have focused on the threat of China’s heavily subsidized EVs, protecting their markets with tariffs, U.S. and European automakers face greater competition from China’s gas-guzzlers in countries from Poland to South Africa to Uruguay. Fossil-fuel vehicles have accounted for 76% of Chinese auto exports since 2020, and total annual shipments jumped from 1 million to likely more than 6.5 million this year, according to data from China-based consultancy Automobility.
The boom in gasoline-powered exports is driven by the same EV subsidies and policies that wrecked the China businesses of automakers including Volkswagen, GM and Nissan by underwriting scores of Chinese EV makers and igniting a devastating price war, a Reuters examination found.
The phenomenon highlights the far-reaching impacts of Chinese industrial policy, as foreign competitors struggle to keep pace with government-backed firms chasing Beijing’s goals to dominate critical sectors nationally and globally.
China’s gasoline-vehicle exports alone – not including EVs and plug-in hybrids – were enough last year to make it the world’s largest auto-exporting nation by volume, industry and government data show. This account of Chinese automakers’ global expansion is based on a Reuters review of auto-sales data in dozens of countries and interviews with more than 30 people, including executives from 11 Chinese and two Western automakers, distribution managers for Chinese brands and industry researchers.
The influx of Chinese gasoline cars into emerging and second-tier markets reflects a collision between Beijing’s current EV push and older policies that built China’s domestic gasoline-vehicle industry by leveraging foreign automakers’ technology.
Among the biggest exporters are state-owned legacy giants, including SAIC, BAIC, Dongfeng and Changan, which historically relied on joint ventures with foreign automakers for profits and engineering know-how. These partnerships started in the 1980s as shotgun marriages forced by Beijing as the price of foreign players’ access to China. More recently, with the rise of innovative privately owned Chinese EV makers, led by BYD, these joint ventures’ sales have plunged. SAIC-GM’s annual China sales, for instance, fell from more than 1.4 million vehicles to 435,000 between 2020 and 2024, SAIC data show.
Now these state-owned players are racking up sales in export markets that were once the domains of the same foreign automakers who are their partners in China. SAIC’s exports – mostly of its own brands, without GM – soared from nearly 400,000 annually in 2020 to more than a million last year.
Dongfeng’s exports of nearly 250,000 vehicles last year, up almost four-fold in five years, proved critical as sales of its China partnerships with Honda and Nissan entered a “downward spiral,” said Jelte Vernooij, Dongfeng’s Central Europe manager.
Dongfeng’s annual global sales have fallen by a million vehicles since 2020, to less than 2 million, company filings show. Yet Vernooij isn’t worried about Dongfeng’s future – because it has Beijing’s backing.
“The fact that we’re state-owned is key,” he said. “There’s no question that we will survive.”
There’s also no question that, for now, gasoline cars are selling better in second-tier markets, such as Eastern Europe, Latin America and Africa, with scarce EV-charging infrastructure. Longer term, Beijing aims to dominate EVs and plug-in hybrids globally. But in the interim, many Chinese automakers are building overseas brands by giving customers whatever they want.
China’s top auto exporter is Chery, whose global sales rocketed from 730,000 vehicles to 2.6 million between 2020 and 2024. Chery, which has both state and private owners, grew annual exports over the period by about a million units – relying mostly on the gasoline-powered vehicles that comprise four-fifths of its sales. China’s top 10 exporters include five other state-owned automakers and two private ones, Geely and Great Wall Motor, that also sell more gasoline vehicles than EVs.
Only two of China’s top 10 auto exporters focus exclusively on battery-powered vehicles. One of them is U.S. electric-car pioneer Tesla. The other is BYD, which sells only EVs and plug-in hybrids. BYD’s push abroad this year has made it China’s second-biggest exporter and tilted the nation’s exports toward plug-in cars. Still, China’s gasoline-vehicle exports are on pace to exceed 4.3 million and account for nearly two-thirds of this year’s total.
Overseas managers for Chery, Dongfeng and another state-owned automaker, FAW, told Reuters China’s cutthroat car market has made exports essential to Chinese automakers’ growth and profits. Giles Taylor, global vice president for design at FAW, believes some domestic rivals are one product failure away from going under.
“China’s so overpopulated with car companies,” he said. “It’s right on the edge of dog-eat-dog.”
Most brands have focused on gasoline-car exports, the managers said, simply because they’re easiest to sell in most regions. “We can fine-tune our offering for every market,” said Nic Thomas, Changan’s European marketing director.
Other top exporters SAIC, BAIC, Geely and Great Wall Motor and the government’s economic planner, the National Development and Reform Commission, did not comment for this report.
Global automakers’ executives have widely acknowledged that rising Chinese rivals pose a serious competitive threat, but mostly in the context of their innovative and affordable EVs rather than gasoline models. Representatives of Toyota, Ford, Nissan and Hyundai did not comment on China’s export surge.
Some legacy players say they’re ready for the fight. Alexander Seitz, Volkswagen’s South America chief, said he had “no fear of the Chinese.”
“I respect them as a competitor,” he said. “They’re welcome to join the party.” In response to Chinese competition, Volkswagen is looking to export cars built in China to more overseas markets.
A GM spokesperson pointed to CEO Mary Barra’s October remarks that the company aims to compete with Chinese rivals “with the right technology, at the right cost.”
IdleChinese automakers’ rush to export gasoline cars can be traced to government policies that created a glut of factory capacity to build them.
Idle factories
China’s rapid EV growth idled assembly lines capable of producing up to 20 million gasoline-powered cars annually, estimates Automobility CEO Bill Russo. Such unproductive overhead raises costs, pressuring automakers to repurpose capacity for exports.
“That excess capacity is being aimed back at the rest of the world,” Russo said.
Consultancy AlixPartners predicts Chinese automakers’ annual sales outside China will grow by 4 million vehicles by 2030, taking large market shares in South America, the Middle East, Africa and Southeast Asia. Including expected growth in China, the world’s largest car market, Chinese automakers are expected to control 30% of the global auto industry in five years.
“That growth will come at the expense of everyone else,” said Stephen Dyer, joint head of AlixPartners in China.
Beijing’s policies over a decade encouraged automakers to build new EV plants rather than convert existing gasoline-vehicle factories. Local governments fueled the factory boom with subsidies as they competed to lure EV makers, in service of Beijing’s economic goals, Reuters has reported. Automakers got cheap EV factories financed by cities and provinces eager to demonstrate development.
“Local governments even prepare the land and build the factories, allowing companies to ‘move in with just a suitcase,'” said Liang Linhe, chairman of Sany Heavy Truck, among China’s largest truck makers.
The result: massive overcapacity. At a March EV conference, Su Bo, China’s former vice minister of industry, urged regulators to promote the conversion of gasoline-car factories to build battery-powered models. He estimated China’s industry had built capacity for 20 million EVs and plug-in hybrids annually but remained saddled with enough factories for 30 million gasoline vehicles – far more than its domestic market needs.
Declining gasoline-car sales, he said, are “leaving substantial capacity underutilized and plunging the sector into a critical survival crisis.”
As EV startups built factories across China, legacy Chinese automakers scoured the world for new gasoline-car markets to sustain their underutilized factories.
On a September day in Warsaw, Poland, new SUVs with chrome “BEIJING” logos lined the Plaza dealership. Under those hoods sat gasoline-powered engines manufactured by BAIC, the automaker owned by Beijing’s city government.
BAIC is among 33 Chinese brands that have launched or announced Poland sales since 2023, many selling primarily or exclusively gasoline-powered vehicles, company announcements and GlobalData sales figures show. Jerzy Przadka, BAIC’s Poland manager, said there are so many lookalike Chinese midsized SUVs that few Poles can tell them apart.
Marcin Slomkowski, country manager for GAC and the Geely brand at distributor Jameel Motors, called the number of new Chinese competitors in Poland “simply madness,” adding that local-market expertise will be “key for survival.”
Inchcape, a global auto distributor, has secured most of its recent contracts from Chinese automakers entering emerging markets, said Inchcape CEO Duncan Tait.
The new global entrants include older manufacturers struggling to meet Beijing’s EV-development mandates while preserving gasoline-car profits. They have to tailor exports to what each market can absorb – which in emerging economies is gasoline vehicles – rather than push EVs on markets not yet ready for them.
“The model you have with China won’t necessarily work in Costa Rica, Peru, Indonesia or Greece,” Tait said. “You have to face the world as it is, not how you want it to be.”
Even in some wealthier economies, fossil-fuel vehicles are a big part of Chinese brands’ line-up. Almost all of the cars Chery has sold to date in Australia have gasoline engines. The company only recently started to introduce plug-in models.
China automakers’ engine-type pragmatism created new fronts in their market-share battle with foreign rivals. Many automakers historically focused their engineering and marketing on the largest or wealthiest car markets – the United States, Europe, China and Japan.
In the developing world, they concentrated on cheaper cars, often with older technology. That’s left the likes of VW, GM and Stellantis vulnerable to an onslaught of affordable Chinese exports, often with better safety features and software, said Felipe Munoz, an auto analyst for research firm JATO Dynamics.
“Legacy automakers were sleeping. Now they’re paying for it,” he said. “The real battle between Chinese carmakers and the legacy carmakers is not happening in Europe. It’s not happening in the United States. It’s happening in emerging markets.”
Antonio Filosa, CEO of Stellantis, was asked at a September investor event how the company would respond to Chinese competitors. In markets including the Middle East and Africa, he said Stellantis would follow its model in South America, where it has a 24% market share, by focusing on locally built cars tailored to local tastes. Stellantis did not comment beyond Filosa’s recent remarks. Facing intensifying Chinese competition, GM and Hyundai announced in August they would jointly develop cars for South America to lower costs.
China’s largest export destination is Mexico – uncomfortably close for the United States, which has essentially banned Chinese-brand vehicles with trade barriers aiming to safeguard national and economic security. South of the U.S. border, where few EVs are sold, Chinese automakers likely will end the year with sales exceeding 200,000 and a 14% market share, according to GlobalData.
Legacy brands such as Fiat, Ford and Chevrolet are losing ground. GlobalData forecasts Chevrolet’s Mexico sales at 52,231 units this year, down more than 24% since 2023. Mexico in September said it would raise tariffs on Chinese cars from 20% to 50%, a move the government said would protect jobs and which analysts called an effort to placate Washington. U.S. officials have pressured Mexico to restrict trade with China to prevent it from using Mexico as a “back door” around U.S. trade barriers.
Chinese automakers also face political headwinds in Russia. Mexico this year displaced Russia as China’s top auto-export market after Moscow doubled fees on Chinese imports to $7,500. Russia raised the levy after China flooded its market with cars – growing share from 21% in 2022 to 64%, or about 900,000 vehicles – in 2024, according to GlobalData. The fees slashed Chinese exports to Russia sharply.
The governments of Russia and Mexico didn’t respond to requests for comment on Chinese auto imports.
Like Russia and Mexico, South Africa has a domestic industry to protect, including global automakers with a large manufacturing footprint. Officials there have encouraged Chinese automakers to build factories while also threatening tariffs to restrict cheap imports.
Chinese automakers controlled nearly 16% of South Africa’s car market in the first half, up from 10% a year earlier, according to JATO Dynamics. They sold nearly 30,000 gasoline vehicles – and just 11 EVs.
Toyota saw the biggest South Africa sales drop among traditional automakers last year, falling almost 15% to 93,805 vehicles, according to GlobalData.
State-owned giant Changan is launching five vehicles in South Africa, including two-battery powered models, but expects its best-seller will be a diesel-powered pickup, or “bakkie,” as they’re known locally.
“The EV market will take more time,” said Marinus Venter, who manages the Changan brand there for distributor Jameel Motors.
The same is true in Chile, where there are limited charging stations along its 2,600 miles (4,200 km) of mountainous seaside terrain. Chinese automakers have captured almost one-third of the market there, according to the local car-industry association. Their growth has come at the expense of legacy brands including Chevrolet, Nissan and Volkswagen, whose sales fell by between 34% and 45% last year, according to GlobalData.
Chinese brands’ strategy in Chile more closely mirrors a legacy automaker such as Toyota – which sells few EVs globally – than it does China’s biggest EV makers.
Like other state-owned players, Dongfeng is reaching deep into emerging markets to boost sales, said Vernooij, the Dongfeng manager in Europe. In Chile, Dongfeng has a broad lineup, from sedans to vans to pickups and SUVs. “We have to win,” Vernooij said. “If you want to be like Toyota, you cannot leave one stone unturned.”
Overall, Chinese brands sold fewer than 1,000 EVs in Chile in the first half but more than 25,000 internal-combustion vehicles, according to data from JATO Dynamics.
In Uruguay, Dongfeng sells gas-powered pickup trucks that compete with Nissan – its longtime China joint venture partner – by selling a version of Nissan’s own truck. The Dongfeng Rich 6 is little more than a Nissan Frontier with different exterior styling and a slightly older Nissan V6 engine. A Nissan spokesperson said the Rich 6 is based on the Frontier and was jointly developed by the two automakers.
One meaningful difference: The Dongfeng starts at about $21,490 compared with about $30,990 for the Nissan, according to Uruguay dealers.
In Durazno, Uruguay, 12,000 miles from Dongfeng-Nissan’s China headquarters, Mariana Betizagasti, 33, recently bought a Rich 6 for the heavy jobs on a cattle farm – hauling feed, transporting animals – that her old Renault pickup couldn’t handle.
The low price, she said, sealed the deal: “You can buy two Chinese trucks for the price of one traditional brand in Uruguay.”
The Nissan spokesperson did not comment on the Dongfeng truck’s lower price, whether Nissan receives revenue from its sales or the overseas competition Nissan faces from Chinese automakers.
Many Chinese automakers, however, sell exports at prices closer to comparable foreign competitors’ vehicles – and much higher than they get for the same models in China’s cutthroat market.
Chery’s Jetour brand aims to hold the line on pricing as it expands to every European country by 2027, said Jetour International executive vice president Yan Jun.
“Right now, not many carmakers in China are making money,” he said in an interview. “We don’t want to get involved in any more price wars.”
