China overtakes Japan as world’s top car exporter on strong EV sales

Car exports rose significantly in Q1 as Chinese EV brands gained popularity overseas.

China saw its car exports jump 58% in the first quarter to become the world's largest car exporter for the first time ever, and the economic giant will likely keep its lead for the rest of the year, according to analysts from UOB Kay Hian.

China exported 1.07 million vehicles last quarter beating Japan’s 954,000 units by 12%, bolstered by a surge in electric vehicle (EV) sales, the brokerage firm said in a research note citing official data.

For the first four months of the year, its export volume rose 75% from a year earlier to reach 1.49 million.

“It was the first time that China's automobile exports surpassed Japan on a quarterly basis, and China will likely keep its lead in full-year 2023,” UOB Kay Hian said.

As the penetration of Chinese EV brands in overseas markets increases, the research forecasts exports to grow its share of China’s EV market to 20% by 2024 from 15% currently.

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It said US titan Tesla remains the biggest EV exporter in China accounting for 41% of the country’s EV export volume in the first four months of the year, although local manufacturers like BYD and Shanghai Automotive Industry Corp are catching up fast.

BYD saw its exports soar by a staggering 1,727% to 53,550 units in those four months with a goal of shipping a total of 300,000 units this year compared to just 55,000 cars in 2022.

The brokerage forecasted the Shenzhen-based can ship between 250,000 to one million EVs overseas annually, from 2023 through 2025.

Chinese EVs were the top brands in Europe and other parts of Asia – Europe being its fastest-growing market.

UOB Kay Hian, however, cautioned that Chinese companies may lose cost competitiveness in countries mulling protectionist measures like France, which is expected to limit its EV subsidies to only those made in Europe.

Back home, it said the domestic EV market is also receiving support from the Chinese government as it recently laid out plans to promote electric cars in rural areas.