Breaking records! Surpassing Japan is just the beginning

Ask AI · Facing profit gaps, how can Chinese brands move from scale leadership to comprehensive leadership?

Recently, Nihon Keizai Shimbun cited data from automakers and McKinsey & Company’s statistics: by 2025, Chinese automakers will have a total global sales volume of nearly 27 million vehicles (including BYD, Geely, Chery, SAIC, and other Chinese brands), while Japanese automakers will be around 25 million. China has for the first time become the world’s largest vehicle seller, and Japan has fallen from the top spot for the first time since 2000.

This is not the first time China’s automotive industry has rewritten the global landscape. As early as 2023, China surpassed Japan to become the world’s largest auto export country. Driven by electrification and intelligentization, China’s auto industry has once again overtaken traditional auto powerhouses in scale.

In the face of the “sales champion” title changing hands globally, netizens vividly compare: it’s like Nokia witnessing Apple’s rise, Kodak experiencing the digital era—an era shift has already occurred.

True Scale Leadership

Today, China’s automotive industry has built a scale advantage in export structure, domestic foundation, and global pattern.

In terms of exports, in 2025, China’s auto exports reached 7.1M units, a 21.1% increase year-on-year, continuing to hold the global first place. Unlike 2023, when China first became the top exporter, 2025’s exports have undergone a qualitative change. The proportion of high-value-added new energy vehicles (NEVs) has significantly increased. More importantly, Chinese automakers are establishing “overseas factories + supply chains” in Thailand, Brazil, Hungary, and other locations, indicating that exports have shifted from simple commodity trade to capacity and standard output.

According to the China Association of Automobile Manufacturers, in 2025, China’s vehicle sales reached 34.4 million units, up 9.4% year-on-year, maintaining the top global position for 17 consecutive years. The massive market size not only provides growth space for automakers but also serves as a testing ground for technological iteration and product optimization. Among them, Chinese brands’ passenger car sales reached 20.94M units, up 16.5%, with a market share close to 70%, thoroughly breaking the long-standing dominance of joint venture brands.

Cui Dongshu, Secretary General of the Passenger Car Association, pointed out that in 2025, China’s share of global vehicle sales reached 35.6%, an increase of 1.4 percentage points from the previous year. Among the top 20 global automakers by sales, China has six brands on the list, surpassing Japan’s five. BYD, SAIC, and Geely are in the top ten globally, while Chery, Changan, and Great Wall have also successfully entered, forming a tiered global competitive landscape.

In contrast, Japanese automakers generally face shrinking scale. In 2025, among Japan’s seven major passenger car manufacturers, Honda’s sales declined by 7.5%, Nissan fell out of the top ten globally for the first time since 2004, and even Toyota, with 11.32 million units, maintained the top spot but showed sluggish growth. Japanese market share in China is being squeezed, and their traditional strongholds in North America and Southeast Asia are being “dimensionality reduced” by Chinese brands’ smart features and cost-effectiveness. The global automotive industry’s balance is experiencing a fundamental tilt.

The scale advantage of Chinese cars continues to consolidate. On April 1, several Chinese automakers released their Q1 2026 sales reports, showing impressive performance. Geely’s cumulative sales in Q1 reached 709.4k units, winning the Chinese brand sales champion for the quarter; new forces in car-making also grew rapidly—Leapmotor sold 110.2k units in Q1, up 25.82%; NIO delivered 83.5k vehicles, a sharp increase of 98.3%.

Continuous Breakthroughs in China’s NEV Sector

Particularly noteworthy is the rise of China’s new energy vehicles (NEVs), which has played a huge role in boosting the entire industry.

In 2025, China’s NEV production and sales hit new highs, with annual sales reaching 16.49 million units, up 28.2% year-on-year, maintaining the top global position for 11 consecutive years.

Over the past year, NEVs have also become the core driver of export growth, with total exports reaching 709.4k units, a 103.7% surge, accounting for nearly 40% of total exports. Leading companies performed especially well: Chery exported 110.2k units, leading the pack, followed by BYD and SAIC.

China’s NEV market remains highly active, with new technologies and products emerging constantly. Just at the start of 2026, several major new models such as Lynk & Co 08 EM-P, 2026 Xiaopeng P7+, and BYD Seal 07 EV have been launched, covering plug-in hybrid, pure electric, and extended-range powertrains.

Meanwhile, industry frontiers are seeing intensive breakthroughs: in intelligent driving, Xpeng has released its second-generation VLA (Visual Language Action) architecture, with vehicles equipped with this system demonstrating full-scenario intelligent driving capabilities; in solid-state batteries, Chery’s Rhino solid-state battery has an energy density of 400Wh/kg, aiming for 600Wh/kg, with a future range exceeding 1,500 km, planned to debut in the Starway ES8 in 2027.

From an industrial ecosystem perspective, China has established the world’s largest NEV industry chain—from upstream lithium mines and battery materials, to midstream power batteries, motors, and controllers, to downstream vehicle manufacturing and charging infrastructure—achieving full-chain independence and control, providing a solid foundation for large-scale NEV development. According to the National Energy Administration, by the end of February 2026, China’s electric vehicle charging infrastructure (chargers) totaled 21.01 million units, a 47.8% increase year-on-year. China has built the world’s largest EV charging network, supporting charging needs for over 40 million NEVs.

Changing consumer demands further reinforce the market position of Chinese NEV brands. Cui Dongshu noted that consumers’ focus on NEVs has shifted from price to overall value, including product strength, driving experience, and lifecycle services. Chinese automakers keenly capture this shift, continuously optimizing range, charging speed, smart features, and after-sales services, enhancing product competitiveness.

Scale Leadership Requires Comprehensive Leadership

In 2025, China’s auto sales surpassing Japan marks an important milestone in reshaping the global auto industry landscape and a significant milestone in China’s automotive development. However, it’s also crucial to recognize that in profitability, brand value, and global operations, Chinese automakers still lag behind giants like Toyota and Volkswagen.

In the first three quarters of 2026, Toyota’s global sales reached 83.5k units, with operating profits around 3.2 trillion yen. Despite a 26.1% decline in net profit, Toyota’s 2025 per-vehicle net profit was about 17k RMB. In comparison, leading Chinese brands like BYD have a per-vehicle net profit of roughly 6,900 RMB, and Geely about 4,770 RMB—about 2.5 and 3.6 times less than Toyota, respectively.

According to the National Bureau of Statistics, in 2025, China’s automotive industry revenue was 11.18 trillion RMB, a 7.1% increase, but profits were only 461 billion RMB, a slight 0.6% increase. Cost growth at 8.1% far outpaced revenue growth, and the profit margin of 4.1% nearly halved from 7.8% in 2017.

Behind these gaps are multiple factors. Product structure-wise, Japanese brands focus on the mid-to-high-end market with strong brand premiums, while Chinese brands’ high-end breakthroughs are still shallow, and price wars further compress profit margins. Cost control-wise, Japanese automakers leverage lean production and global supply chains to achieve extreme cost control across the entire chain. In global operations, decades of Japanese overseas deployment have formed stable profitable businesses, whereas Chinese brands are still investing heavily in overseas factories and channels, with short-term profitability difficult to achieve.

Additionally, Chinese automakers still have room to improve in core technology and key component independence. While they lead in power batteries and smart cockpits, they still rely on overseas supplies for high-end chips, precision manufacturing equipment, and core materials, which raises costs and constrains profits. Moreover, Chinese brands generally face high R&D costs and long payback cycles; for example, BYD’s R&D expenditure in 2025 reached 63.4 billion RMB, up 17%, but such massive R&D spending is hard to translate into short-term profits.

Global auto competition is now a multi-dimensional, comprehensive contest. Leading in sales is just a new starting point. From an auto power to an auto stronghold, Chinese brands still need to face gaps, address shortcomings, and achieve the leap from “scale leadership” to “comprehensive leadership.”

Author: Liu Shanshan

Editor: Zheng Yu