China has surpassed Japan to become the world’s largest vehicle exporter in 2023, according to recent data from Japan’s industry ministry. This marks a major shift in the global auto industry, with China cementing its position as a manufacturing powerhouse.
China’s Vehicle Exports Soar While Japan’s Stagnate
China exported 3.06 million vehicles in 2023, just edging out Japan’s 3.04 million vehicle exports over the same period. This represents a 11% increase year-over-year for China, while Japan’s vehicle exports remained essentially flat.
Much of China’s growth has been fueled by surging overseas demand for Chinese electric vehicles (EVs). EV exports from China jumped 65% in 2023 to account for 16% of total vehicle exports. Meanwhile, EVs still make up a small portion of Japan’s exports.
| Country | 2023 Vehicle Exports | YOY Change | Share of EV Exports |
|---|---|---|---|
| China | 3.06 million | +11% | 16% |
| Japan | 3.04 million | 0% | 5% |
Experts cite China’s economies of scale, global brand building efforts by companies like BYD, and preferential government policies as providing Chinese automakers with competitive advantages to expand exports rapidly.
How China Transformed Into an Auto Export Giant
China’s journey to becoming the top vehicle exporter has been remarkably swift. As recently as 2016, China’s vehicle exports totaled just 762,000 – far behind Japan’s 4.2 million exports that year.
The turning point came in 2020, when the COVID-19 pandemic disrupted supply chains and depressed auto demand globally. Chinese automakers stepped up export drives to make up for weak domestic sales, helped by China’s relatively early recovery from the health crisis. Exports have grown every year since and now overtake Japan.
Industry analysts highlight the billions of dollars in EV subsidies from the Chinese government in the last decade as fueling growth in more advanced, exportable vehicles. Where China previously exported mainly low-end models to developing countries, EVs and premium sedans now make up a majority of overseas shipments. This allowed export value to rise even faster than volume in recent years.
What Are the Implications Globally and for Japan?
The shift in exporter rankings is symbolic of China’s push toward the technological frontier and reflects its growing sphere of economic influence globally. For decades, Japanese automakers like Toyota and Honda have been synonymous with manufacturing prowess and quality. Now China aims to usurp that title, with one Chinese official proclaiming “the age of Japanese cars being the most advanced in the world is gone.”
For Japan, there are concerns its auto industry could go the way of consumer electronics and semiconductors – once strongholds where Japan has lost ground to rivals in South Korea and China over time. However, most analysts believe reports of Japan’s demise as an auto powerhouse are premature.
Japanese automakers still lead globally in technical development, profitability and brand value. The Toyota Corolla and Honda Civic were the world’s top selling car models in 2023. Japan also retains an outsized influence on the critical North American market, where imports from China remain negligible due to political tensions.
But dominance requires continued innovation. Japanese firms will need to build EV capabilities quickly to compete with the latest products from China as more markets mandate zero-emission vehicles. They can no longer rely on traditional combustion engine vehicles that have been pillar of profits.
What Comes Next in Global Auto Industry Dynamics
Most projections see China widening its lead as the number one vehicle exporter over the next decade. Consultancy LMC Automotive forecasts China’s annual auto exports exceeding 7 million units by 2030 – more than triple Japanese exports by that time.
Achieving these figures would require major expansion beyond China’s current main export destinations in the Middle East, Africa and Europe into mature car markets like the U.S. and Japan itself. This is no easy task given entrenched competition and differences in consumer preferences.
However, with total vehicle sales in China dropping some 6% in 2023, exports will become ever more vital to Chinese automakers’ growth ambitions. This gives them motivation to aggressively court overseas customers. Traditional manufacturers need strong responses, or otherwise risk China not just leading in vehicle exports – but increasingly setting the pace of auto innovation worldwide.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
