Chinese Automakers See Surge in Overseas Sales Amid Policy Shifts and Partnerships

In the first half of this year, Chinese-branded vehicles recorded a nearly 30% year-on-year increase in sales in Mexico, reaching 137,525 units and accounting for 17% of the country’s total new vehicle sales. Despite Mexico imposing significantly higher tariffs since January to restrict Asian vehicle imports, Chinese automakers still achieved substantial growth. In June, European new vehicle sales rose 13% year-on-year to 1.38 million units, driven by rising fuel prices due to Middle East conflicts and a wave of affordable electric models entering the market. Battery-electric vehicle (BEV) sales surged by 52% during the month. Chinese-brand vehicle sales in Europe skyrocketed by 118% year-on-year, with SAIC Motor’s MG, BYD, and Chery ranking as the top three, selling 38,640, 38,300, and 35,228 units respectively. According to market research firm Dataforce, Chinese brands captured a record-high 34% share of plug-in hybrid electric vehicle (PHEV) deliveries in Europe. Some analysts note that Chinese automakers are accelerating their rollout of PHEVs to counter potential EU tariff expansions—currently, only BEVs face high tariffs, while PHEVs remain exempt, though policy changes pose a risk. On July 22, the U.S. Senate Committee on Commerce, Science, and Transportation approved a bill that would prohibit connected vehicles from being sold in the U.S. if they are produced by automakers in which Chinese entities hold more than a 15% stake. The provision affects Mercedes-Benz, as its shareholders BAIC Group and Geely together own approximately 20%. The bill does not distinguish between passive financial investments and controlling stakes, sparking controversy. The bill’s sponsors proposed granting Mercedes-Benz a grace period until as late as 2030 and establishing an exemption application mechanism. Mercedes-Benz is actively lobbying to either raise the ownership threshold or introduce case-by-case evaluations. The bill still requires approval from both the Senate and House of Representatives and the President’s signature to become law. Volkswagen Group has deepened its collaboration with China’s Horizon Robotics through their joint venture CARIZON, developing AI-powered driving solutions tailored for the Chinese market under a “white-box” licensing model. The solution will integrate Horizon’s AI foundation large model, Journey C7H chip, and GAIA data platform, and will be progressively deployed starting in Q3 2024 across seven new electric models from Volkswagen’s three Chinese joint ventures, later expanding to its CEA product lineup. Volkswagen aims to deliver Level 3 autonomous driving functionality in China as early as the second half of 2027. On July 20, Honda and GAC Group signed an agreement extending the GAC Honda joint venture term to 2038, maintaining their 50:50 equity split. Both parties will deepen cooperation in product definition, technology development, and supply chain integration. GAC Honda plans to focus on R&D breakthroughs in 2026, pausing projects lacking competitiveness, and will launch three all-new models covering gasoline, hybrid, and pure electric powertrains intensively in 2027. On July 23, Ford and Geely announced the establishment of a joint venture in Valencia, Spain, to share production capacity for multi-energy vehicles. The JV is expected to begin operations in the first half of 2027 and start production of its first vehicle in 2028, including the Ford Kuga, a new member of the Bronco family, a jointly developed crossover, and two Geely new energy models. Toyota’s newly appointed president, Kenta Kon, recently stated the company will reduce the number of parts to enhance efficiency and profitability, targeting a 35% reduction in part varieties and warehouse space, along with lowering its break-even production volume. He emphasized the importance of maintaining manufacturing in Japan while driving collaborative cost and quality optimization with suppliers. He also predicted that AI and robotics will be widely applied in production, yet the irreplaceable role of humans in new factories will become even more prominent.