Chinese car sales are booming almost everywhere – just not at home

Car sales in China fell by a fifth to 1.47 million vehicles in July, marking the 10th straight month of decline.

BEIJING – China’s car industry is on a tear overseas, storming markets from Europe to South-east Asia and heaping pressure on long-established automakers like Toyota Motor and Volkswagen.

But it is a different story at home, where car sales have been in steady decline since late 2025, as weak consumer demand and years of intense price competition have left the world’s biggest auto market glutted with excess capacity.

While major Chinese car companies like BYD, Geely and Chery have long aspired to become global heavyweights, the industry’s rapid expansion is now driven as much by economic necessity as by ambition, analysts and industry insiders say.

Faced with lacklustre domestic demand, China’s automakers have an increasingly powerful incentive to accelerate a push overseas that was already well under way.

That will only add to the squeeze on European and Japanese rivals already struggling to compete with China’s technologically advanced, low-cost electric vehicles (EVs).

“Chinese automakers have excess manufacturing capacity, highly competitive supply chains, increasingly sophisticated products and a strong economic incentive to find growth outside China,” said Bill Russo, chief executive of Shanghai-based advisory firm Automobility. Going global “is becoming a strategic necessity” for leading Chinese carmakers, he added.

Car sales in China fell by a fifth to 1.47 million vehicles in July from a year earlier, marking the 10th straight month of decline, data from the China Passenger Car Association showed on Aug 11.

Although the data includes non-Chinese brands produced in China, the trend of double-digit falls at home and double-digit export growth holds up among domestic automakers.

Cui Dongshu, the head of the passenger car association, attributed the latest weakness to elevated fuel prices that hurt demand for gasoline-powered vehicles and persistent softness in the entry-level sedan segment.

More broadly, the car industry reflects the dynamics now playing out in the world’s second-largest economy.

Booming factories and exports are propping up growth, while a weak property market and ailing consumer spending are curbing domestic demand.