31 Aug State of China’s Auto Market – August 2025
Written by Bill Russo, Founder & CEO of Automobility Ltd.
Key Headlines Summary through July 2025
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China on pace to surpass 2024 peak shipments, with ~20% of Made-in-China vehicles now sold in overseas markets. -
NEV shipments surged +38.5% YoY, adding ~2.3 million units; penetration rose 8.6 percentage points versus 2024. -
Exports up +12.8% YoY (+418k units), with growth led by Mexico, Australia, the Philippines, and Middle East markets. -
NEVs have surpassed ICE passenger vehicle sales in China through July 2025—an historic tipping point. -
Chinese brands dominate domestic PV share (68.6%), accounting for all YoY growth as foreign brands lose one-third of their share since 2020. -
Tesla volumes remain sluggish, with Giga Shanghai exports at historic lows amid an aging product lineup. -
Smart EV competition intensifies: Li Auto leads but faces narrowing gaps from Xiaomi, HIMA, and XPENG. -
Global shift from exports to localization: Chinese OEMs accelerate overseas factory investments as tariffs push “glocalization”.
China Auto Shipments Surge: NEVs Power Double-Digit Growth as ICE Slips
Vehicle shipments rose 12% through July 2025, with Made-in-China exports up 10.7%. Total passenger and commercial vehicle shipments reached 18.3 million units, keeping the market on pace to surpass last year’s record peak.
New Energy Vehicle (NEV) shipments surged 38.5%, adding roughly 2.3 million units compared with the same period in 2024. In contrast, Internal Combustion Engine (ICE) shipments fell 3.2%, a decline of 327,000 units year-on-year.
July shipments dipped slightly from the prior month, but both passenger and commercial vehicles recorded solid year-over-year gains.The double-digit growth so far in 2025 has been powered by surging NEV demand and robust exports of Made-in-China vehicles. Extended trade-in subsidies, coupled with aggressive pricing by local manufacturers, have further strengthened passenger vehicle sales.
Made-in-China Exports Hit Records as BYD Drives NEV Boom
Exports of Made-in-China (MIC) vehicles remain at record highs, with May through July marking the strongest three-month stretch in history. Export volumes rose 12.8% year-to-date through July, with New Energy Vehicle (NEV) exports already surpassing the full-year 2024 total. NEVs now account for 35.5% of all MIC exports, led by BYD’s aggressive global expansion. BYD alone added 315,000 incremental NEV exports versus last year and represents about 42% of all MIC NEV exports.
Mexico remains the top destination for MIC vehicles, with shipments surging 88% year-over-year. Australia, the Philippines, and Middle Eastern markets also delivered strong growth, while Kazakhstan entered the top 10 export destinations for the first time—underscoring the rising importance of emerging Asian markets in China’s global expansion strategy.
Ultimately, we see leading Chinese automakers shifting toward “glocalization”—evolving from an export-led model to establishing regional production capacities closer to global consumers, while also navigating the growing network of tariff barriers worldwide.
This theme was explored in our 2024 paper, The Path to Globalization of China’s Automotive Industry.
The Path to Globalization of China’s Automotive Industry [2024]
NEVs Take the Lead: ICE Falls Into Minority for Passenger Vehicles
Domestic vehicle sales rose 10.4% through July, fueled by replacement subsidies, aggressive pricing, and resilient NEV demand.
China’s automakers call this hyper-competitive environment “neijuan”—a cycle of price wars, overcapacity, and relentless innovation. While Beijing has sought to restore “orderly competition,” the reality on the ground tells a different story:
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Price cuts remain the default lever for gaining share -
NEV production capacity exceeds 15 million units versus ~10 million in domestic demand -
Exports provide short-term relief — but are sparking global trade pushback
This is no longer just a battle for survival. It is a strategic race to dominate 21st-century mobility, with short-term profits sacrificed in the pursuit of scale, innovation, and global reach.
Through July, BYD remains the NEV market leader with a 29.2 percent share. Their volume is more than double that of Geely Group which has secured second place with over 800,000 units. The only foreign brand with significant share in the NEV race is Tesla with 4.7%, however their sales are down 6.3% in 2025 as they struggle with an aging product portfolio. Despite this, Model Y is the second best selling nameplate in China thus far in 2025.
In 2025, the NEV passenger vehicle market has overtaken ICE, with 6.46 million NEVs sold versus 6.27 million ICE vehicles. The NEV market is highly concentrated, with BYD holding a commanding 29% share, followed by Geely (13%) and SAIC (7%). Over 80% of NEVs sold are from local Chinese brands, underscoring their dominance. In contrast, the ICE segment remains led by global legacy players, with VW (22%) and Toyota (13%) at the top, though Chinese brands like Geely, Chery, and Chang’an are still competitive.
The data highlights a structural shift: legacy OEMs remain stronger in ICE, but China’s local brands overwhelmingly control NEVs, positioning them for long-term leadership as the market transitions.
Local OEMs Reshape the Rankings: BYD Leads, Geely Surges
Foreign automakers continue to lose ground in China’s passenger vehicle market, ceding 33 percentage points of share since 2020. Through July 2025, local brands account for nearly 69% of shipments, up from just 36% five years ago, and they are responsible for all of the market’s year-over-year growth. In contrast, foreign brands have seen sharp declines: German OEMs fell 8.2% year-on-year, Japanese brands dropped 7.0%, and U.S. automakers slipped 3.1%. The data highlight a structural shift in market power as Chinese automakers consolidate their dominance while global OEMs struggle to maintain relevance.
BYD has widened its lead as China’s top passenger vehicle group in 2025, delivering 1.89 million units (15% share), supported by its dominant NEV portfolio. Volkswagen (1.46 million, 11%) and Geely (1.43 million, 11%) follow, with Geely’s balanced ICE/NEV mix enabling it to join VW in the top tier. Toyota (875k) and Chang’an (792k) round out the next group, while Chery and SAIC each sold around 750k units. Tesla remains the only foreign brand with notable NEV share, though it ranks outside the top 10 in total sales. Overall, local OEMs increasingly competitive across both ICE and NEV segments.
Conclusion
China’s auto market in 2025 is undergoing a profound transformation. NEVs have decisively overtaken ICE vehicles, local brands are consolidating dominance at home, and exports are scaling new highs while accelerating toward global localization. Hyper-competition, or neijuan, continues to define the domestic landscape, driving both relentless innovation and profit pressure. As Chinese automakers race for scale and international reach, foreign brands face shrinking share and the challenge of adapting to a market where the balance of power has permanently shifted.
Join us on Thursday, August 21 at 9am China time for the monthly AmCham Shanghai for regular State of China Auto Market Monthly Webinar, where we will review the latest market results through July 2025 and highlight recent news from the world’s largest and most progressive automotive market.
Webinar | State of China Auto Market Monthly Briefing (August)
AUTO INSIDER PODCAST
🎙️ Catch Up on the First 3 Episodes of the Auto Insider Podcast hosted by Bill Russo. Insights from the front lines of China’s mobility transformation — where speed, scale, and strategy are redefining global competition.
🚗 Episode #3: Competing at China Speed: A Tier-1 Perspective from Magna with Zhen Wu, President of Magna China
🔧 Episode #1: Smart EVs and the Smart Tier 0.5 Supply Chain with Jack Cheng , Co-Founder of NIO and CEO of M-Mobility
We’re just getting started — more conversations coming soon with the visionaries shaping the future of mobility.
AUTOMOBILITY MEDIA
Some fear Chinese automakers’ playbook is existential threat to US auto industry
Detroit News, July 21
Bill Russo, CEO of consulting and investment platform Automobility Ltd. in Shanghai, said “the foreign brands have had to rethink, because the whole pricing strategy and the whole content strategy has always been pegged around brands that are defined and differentiated based on their driving performance. It’s not about that in the 21st century.”
More people in China ride than drive, which means they are looking for a vehicle space to live in and enjoy, he explained. The bragging right of the car, Russo said, isn’t about the 0-60 mph acceleration.
“When the transition happens to EV, it goes from an analog to more of a digital measure of technology differentiation,” he said. “It’s not that I-get-the-good-stuff-if-I buy-the-bigger-engine way of thinking about product planning. I get the good stuff or I opt in for more intelligence, more experience, more comfort, more cabin comfort.”
How BYD Caught Up with Tesla in the Global EV Race
Financial Times, July 21
In China BYD now commands a 21 per cent market share, according to Shanghai consultancy Automobility Ltd. Tesla, the company credited for sparking consumer interest in electric vehicles when it brought its first model to China in 2013, holds 8 per cent.
Source: https://www.ft.com/content/81f97fd3-c889-46af-990c-051d32821102?sharetype=blocked
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About Bill Russo
Bill is a contributing author to the book Selling to China: Stories of Success, Failure, and Constant Change (2023), where he describes how China has become the most commercially innovative place to do business in the world’s auto industry – and why those hoping to compete globally must continue to be in the market.
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