In the first half of 2026, China exported 4.059 million vehicles, a year-on-year increase of 63%. At this pace, annual exports are on track to surpass 10 million units, making China the world’s first country to exceed 10 million vehicle exports in a single year—approximately 2.5 times Japan’s exports over the same period. Meanwhile, the domestic passenger vehicle market remains sluggish: from January to May, cumulative retail sales totaled 7.099 million units, down 19.5% year-on-year. Export dependence among major Chinese自主品牌 has risen significantly. BYD sold 1.8085 million vehicles in the first half of 2026, a 15.72% decline year-on-year, with growth driven primarily by exports—790,000 units in total during the period, including 174,800 units in June alone. Chery exported 940,000 vehicles in the first half, accounting for 74.3% of its total sales. Chinese brands have made strong gains overseas. In May 2026, five Chinese automakers—including BYD and SAIC—sold a combined 138,400 vehicles across 31 European countries, up 65% year-on-year, surpassing for the first time the combined sales of six Japanese automakers, including Toyota, in the region. Chinese brands’ market share in Europe rose from 5.6% in May 2025 to 10.7% in May 2026. This rapid growth has triggered trade tensions. Effective July 1, 2026, the European Union imposed definitive countervailing duties on Chinese-made battery electric vehicles (BEVs), with some companies facing combined tariff rates exceeding 45%. The EU is also considering extending these duties to plug-in hybrid electric vehicles (PHEVs). In response, China’s Ministry of Commerce issued a final anti-dumping ruling on pork products originating from the EU, imposing tariffs ranging from 4.9% to 19.8% for a period of five years, and plans further countermeasures targeting products such as brandy and dairy goods. To navigate these trade barriers, multiple Chinese automakers are accelerating localized overseas production. BYD is building a factory in Hungary, expected to begin operations in 2027; Chery has already established facilities in Brazil and Spain; and SAIC continues to deepen its presence in Thailand. China’s auto exports have now shifted from capturing incremental market opportunities to navigating complex international competition, facing multifaceted challenges including high EU tariffs, potential trade restrictions in North America, and intense rivalry from Japanese brands in Southeast Asia.