Chinese carmakers pushed further into foreign markets in 2025 even as the domestic industry grappled with thin margins and structural change. BYD announced plans to introduce at least three new models in South Korea this year — the compact Dolphin, a rear‑wheel‑drive version of the Seal and a vehicle equipped with its DM‑i hybrid system — and set an initial sales target above 10,000 units. That bold overseas push sits alongside a raft of commercial and supply agreements, signalling that China’s largest EV manufacturer is moving from export experiments to sustained market entry.
Back home, industry figures show a sector that is expanding in volume but under pressure on profitability. China produced about 34.78 million vehicles in 2025, and the auto industry reported roughly RMB 11.18 trillion in revenue and RMB 461 billion in profits, yielding an industry profit margin near 4.1%. That is notably below the downstream industrial average of 5.9% and marks a continuation of historically low margins, with December’s monthly margin falling to about 1.8% — a reminder that growth in units sold has yet to restore robust earnings.
Global demand trends still favour battery electric vehicles. Research firm IDC projects global BEV sales above 12.1 million in 2025, driven increasingly by the lower‑priced, entry‑level segment as battery costs fall and charging infrastructure improves. For Chinese exporters such as BYD, that market shift is an opportunity: their low‑cost, high‑feature models are well aligned with demand in many overseas markets where buyers are price‑sensitive but attentive to range and features.
Yet incumbents have not ceded ground. Stellantis reported more than 2.42 million new vehicle registrations in Europe in 2025, securing a 16% market share and consolidating its position as the continent’s second‑largest automaker. The result underscores two broader trends: European groups remain resilient despite weak overall demand, and competition is intensifying as legacy players and new entrants vie for share in the fast‑moving electric and hybrid segments.
The industry’s internationalisation comes with risk. Volkswagen has initiated a U.S. recall of 43,881 ID.4 vehicles over potential high‑voltage battery overheating, a reminder that quality and regulatory compliance can complicate cross‑border expansion. Meanwhile, General Motors posted mixed results for Q4 2025 and approved another $6 billion in share buybacks even as it guides for adjusted EPS of $11–$13 in 2026, signalling continuing pressure to balance capital returns with heavy investment in electrification and software.
Local and regional policies are also shaping demand. Dongguan city has allocated RMB 80 million in new‑car purchase subsidies, capped at RMB 5,000 per vehicle, as municipal governments try to stimulate consumption. At the same time, supply‑chain ties deepen: BYD signed a memorandum with ExxonMobil on strategic cooperation and secured a multi‑year electrolytes supply agreement through Haike New Energy for a Hubei battery project, while a $130 million battery plant in Vietnam with local partner Kim Long highlights how Chinese firms are building manufacturing capacity abroad.
Taken together, the facts point to a transitional phase in the global auto industry. Chinese manufacturers are accelerating outward, leveraging cost and battery advantages to enter competitive Asian and European markets, while established global groups shore up volumes and margins amid safety recalls, heavy R&D spending and evolving consumer preferences. The next 12–24 months will be decisive: will incumbents defend their turf by accelerating technology adoption and price competition, or will the scale and vertical integration of Chinese firms permanently alter market shares and margins worldwide?