Chinese automakers increase market share by expanding local production overseas

(Seoul = Yonhap News) Reporter Jang Ha-na = In order to overcome sluggish domestic demand, the Chinese automobile industry is expanding its market share by increasing not only exports but also local production overseas, such as in Europe.

While the European Union (EU) is recently pushing for a 'preferential law for European electric vehicles', China's expansion into overseas markets is in full swing, and price competition is expected to intensify in the future.

According to the International Energy Agency (IEA) on the 30th, the overseas production capacity of Chinese automobile companies is approximately 1.7 million units as of 2025.

BYD is operating local plants in Uzbekistan, Brazil, and Indonesia, as well as a Thai plant with an annual capacity of 150,000 units, which will be operating from July 2024.

In addition, BYD has begun construction and production of a factory in Szeged, Hungary, with an annual capacity of 150,000 units, as Europe's first passenger car production base, and plans to expand production capacity to 300,000 units in the future.

Chery Motors is pursuing automobile production at the former Nissan plant in Barcelona in a joint venture with Spanish automaker Ebro. The goal is to establish a production system of up to 150,000 units per year by 2029.

Shanghai Automotive Corporation (SAIC) also plans to establish its first production plant in the European Union (EU) in northwest Spain. The goal is to start operation in 2028, with an annual capacity of 120,000 units.

The industry predicts that Chinese automakers' overseas production capacity will increase to more than 3 million units by 2030, considering future expansion plans.

Currently, more than half of the overseas factories of Chinese automakers are located in Southeast Asia, and the overall operation rate is low, but more than 80% of the planned volume is KD, which exports parts from China and assembles them locally, so as local production increases, exports also increase.

According to the China Passenger Car Market Information Association (CPCA), China's automobile exports from January to August of this year are continuing to grow rapidly, reaching 6.099 million units, a 71% increase compared to the same period last year.

Meanwhile, Chinese companies are expected to speed up their overseas expansion by taking over the facilities of existing automakers.

In fact, mass production at BYD's Hungary plant was delayed by a year, and construction of Türkiye was delayed for two years, but new construction is slow, but the acquisition of idle facilities and consignment production are progressing quickly due to low capital burden.

BYD and Changcheng Motors (GWM)'s Brazilian factories took over Ford and Mercedes' factories, respectively, and began production in 2025, and Leaf Motor will begin joint production at Stellantis' Spanish factory.

Global competition is becoming more intense with China's full-fledged expansion into overseas markets.

The combined market share of Chinese brands in Brazil rose from 6.9% in 2024 to a cumulative 17.8% from January to August this year. In particular, its market share has increased from 10% to 23% last month since the third quarter of 2025 when production began at the Brazilian plant.

Song Seon-jae, a researcher at Hana Securities, said, “What is noteworthy is that the trigger for the surge in market share (of Chinese brands) was not direct exports but local factory operations,” adding, “We should be concerned about the possibility that the shield will weaken in 2027-2028, when local production in Europe increases, and that the jump confirmed in Brazil will repeat.”

According to the Korea Automobile Research Institute, European sales of Chinese finished cars increased by about 65% in the first half of this year, and market share also rose to about 11%.

Sales of five automakers, including BYD and Geely, increased 71% from $178 billion (about 245 trillion won) in 2019 to $305.1 billion (about 420 trillion won) last year, while operating profit margins remain in the 2-4% range, and Chinese companies are expanding supply while maintaining low profitability.

Meanwhile, the EU has recently been discussing the enactment of the Industrial Acceleration Act (IAA), which would require more than 70% of parts in major industrial sectors such as electric vehicles to be made in the EU and require assembly within the region, which is expected to be relatively advantageous to the Chinese auto industry, which is increasing local production in Europe.

Kim Han-sol, head of the Korea Automobile Research Institute's Industrial Research Department, said, "Chinese companies' expansion into Europe is not limited to exports but is leading to the establishment of a local production base, so this competitive pressure is likely to continue in the mid- to long-term, not just a short-term increase in exports."