China shipped roughly 930,000 vehicles abroad in May, up 68.7% from a year earlier. Passenger car exports jumped 73% to about 809,000 units, according to data from the China Association of Automobile Manufacturers reported by the AP, while exports of new energy vehicles, including battery EVs and plug-in hybrids, more than doubled year-over-year to account for over half the total.
Japan was the world’s largest vehicle exporter as recently as 2022, shipping 4.8 million vehicles in 2019 while China exported less than a million. China overtook Japan in 2023, and the gap has widened every year since. By 2024, China’s exports had climbed to 5.5 million while Japan’s slipped to 4.2 million, according to McKinsey data. China’s 4.05 million vehicles exported in the first five months of 2026 alone puts it on track to extend that lead further.
China built car manufacturing capacity for a market that’s no longer buying at that pace, and exports are where the surplus is going. China’s Passenger Car Association reported domestic new-car sales fell 22.3% year-over-year in May, the eighth straight month of declines, part of a broader slump that has pushed full-year sales down nearly 20% so far in 2026.
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The downturn pushed CAAM’s parent body to slash its full-year sales forecast from an expected 1% decline to an 11% one, and years of domestic price wars have eroded profit margins enough that automakers increasingly need overseas sales to stay profitable.
UBS China auto analyst Paul Gong added that elevated global oil prices, tied to the Iran war, have pushed more overseas buyers toward EVs specifically, giving Chinese exporters a demand tailwind on top of their own capacity problem.
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Southeast Asia has become a key release valve for that oversupply. China’s EV exports hit a record $9.2 billion in May, according to energy think tank Ember, with shipments to ASEAN countries reaching an all-time high of $1.2 billion. Thailand imported more than 36,000 Chinese EVs in the month and the Philippines took over 33,000, as governments across the region cut import duties and pushed electrification to reduce dependence on imported fuel.
BYD sold more than 160,000 vehicles abroad in May alone, up 80% year-over-year, and is targeting 1.5 million overseas sales for the full year, up more than 40% from 2025. The company overtook Tesla as the world’s largest EV maker by sales in 2025. UBS forecasts China’s overall passenger car exports will rise about 40% in 2026, with EV exports climbing closer to 80%.
