China's Auto Overcapacity Worsens in 2025 as Carmakers Accelerate Overseas Expansion for Growth

In 2025, China's actual automotive production capacity reached 47.5 million vehicles, while sales totaled only around 35 million—a severe case of overcapacity. During the same period, retail sales of automobiles declined by 1.5% year-on-year, reflecting weak domestic demand. Combined with shrinking industry profit margins, automakers faced mounting pressure on profitability. To tackle this crisis, a new round of price wars erupted at the beginning of 2026, and numerous automakers shifted their focus overseas: GAC Group prioritized building a "second growth curve," Geely set a target of over 50% year-on-year growth in overseas sales, and companies like Chery and BYD also raised their export expectations. However, expanding abroad entails uncertainties, prompting industry calls for deeper domestic reforms to unlock consumer potential, accelerate the elimination of excess capacity, and restore supply-demand balance.