Global automotive exports and China’s expanding export share Report Interpretation

Overview

This global automotive trade tracker examines China’s accelerating vehicle exports and their effects on import patterns, OEM competition, regional trade flows, auto parts, tyres, foreign exchange and input costs. Morgan Stanley’s central conclusion is that weak domestic demand is continuing to redirect Chinese OEM output overseas, lifting China’s market share in many global markets and increasing pressure on traditional volume OEMs.

Core views

China’s vehicle export momentum remained strong in August. Morgan Stanley reports China auto exports up 43% year-on-year in USD terms and 38% in volume, following robust growth across Europe, Australia, Japan, India, Latin America, South Africa and other markets. The report links this export push to lukewarm Chinese domestic demand and limited breadth in the September product-launch cycle, which leaves Chinese OEMs seeking overseas outlets. China vehicle imports, in contrast, suffered another setback, although they have stabilized sequentially in recent quarters at roughly one-quarter of their 2020 peak level. The report identifies China’s expanding global share as the principal concern for traditional volume OEMs. China-made vehicles are gaining share across many markets, with particularly strong progress in the UK, Italy and Spain; France and Germany lag somewhat, which Morgan Stanley attributes in part to consumer attachment to local brands. China’s share is also increasing in Eastern Europe. In Europe, imports from China—particularly electric vehicles—continue to reach new levels, while imports from other major regions lose ground. EU new-car imports rose 22% year-on-year in the latest available month, with imports from China up 73%; hybrid imports rose 60% and BEV imports rose 24%. European policy is an important transmission channel in the report’s analysis. Regulatory proposals involving local-content rules, minimum prices and tariffs on hybrid cars are presented as adding incentives for Chinese OEMs and auto-parts suppliers to build local inventories and onshore assembly in Europe. At the same time, German vehicle exports to China remain depressed at around one-quarter of their 2021 historical peak volumes. German exports to the US have improved sequentially, though they remain affected by tariffs and are around 60% below their 2022 peak; Morgan Stanley says some lost volume has been redirected to other markets. China’s overseas expansion is broad but not uniform. China-origin vehicle imports grew strongly in the UK, Germany, France, Italy, Spain, India, Argentina, Japan, Australia and South Africa. The latest available figures show China vehicle-import growth of 126% in Italy, 64% in France, 48% in Spain, 47% in Japan, 42% in India, 150% in Australia and 90% in South Africa. Mexico turned positive at 10%, while imports from China fell in the US and Turkey. This pattern reinforces the report’s conclusion that export growth is geographically diversified despite continuing barriers in certain markets. Other major exporters show divergent conditions. US automotive exports remain down year-on-year but are improving sequentially; exports to China are still declining but at a slowing pace and remain only a small fraction of historical peak levels. US automotive imports have returned to growth after several negative quarters. Japanese passenger-car exports are expanding, led by Europe and now supported by growth into the US, while exports to the UK are flat and exports to China have deteriorated sharply. In emerging markets excluding China, India continues to post high export growth and Mexico is marginally positive, whereas South Korea and Argentina have experienced sharp export declines; Brazil, Turkey and Thailand remain in negative territory on volume measures. The parts and tyre trackers indicate that China’s competitive export position extends beyond finished vehicles, but with differing cost sensitivity. China auto-parts exports are growing again, though less quickly than vehicle exports, while China parts imports remain in a negative trend after a steep fall from their 2021 peak. US and South Korean auto-parts exports remain negative, while Canadian exports are improving and growing. China tyre exports declined again, which Morgan Stanley attributes to pressure from Brent- and rubber-related input costs and high shipping costs. By contrast, tyre exports are expanding in Japan, South Korea, Canada, Mexico and the US. Cost and currency conditions remain relevant to relative competitiveness. Morgan Stanley says the headwind for European players has eased against the Korean won, Mexican peso and Japanese yen, while conditions are stabilizing against the US dollar, Chinese yuan, pound sterling and Indian rupee; the Brazilian real is again under pressure. Hedging reduced the impact in 2026, but rolling hedges are now occurring at higher levels. Commodity and logistics costs are also rising: Brent-linked inputs, shipping, aluminium, copper and rubber have increased, lithium is stable, and cobalt and nickel have declined. These factors are presented as influencing both OEM competitiveness and tyre-sector export performance.

Analysis framework

Morgan Stanley tracks monthly and quarterly trade data across major automotive producing and importing markets, comparing year-on-year and sequential changes in vehicle, auto-parts and tyre exports and imports. It then links trade flows to domestic demand, OEM market-share shifts, regional regulation, currency movements, commodity costs and shipping costs.

Methodology notes

• Industry AnalysisSupply-demand framework

  Domestic demand and export supply balance

  The report links lukewarm domestic Chinese auto demand to greater overseas export supply from Chinese OEMs and assesses the resulting impact on global import competition.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Vehicle, auto-parts and tyre trade transmission

  The report separately tracks finished vehicles, auto parts and tyres to show how export competition and cost pressures extend through the automotive supply chain.

• Industry AnalysisVolume-price decomposition

  Trade values and volumes

  Morgan Stanley compares USD-value and unit-volume growth where available, distinguishing export value performance from underlying shipment volumes.

Key data

• China auto exports+43% YoY in USD; +38% YoY in volumeAugust 2026 growth
• China vehicle importsAround one-quarter of 2020 peak levelsStabilizing sequentially despite another setback
• EU new-car imports+22% YoYLatest available month
• EU imports from China+73% YoYLatest available month
• Italy vehicle imports from China+126% YoYLatest available month
• Australia vehicle imports from China+150% YoYLatest available month
• Germany vehicle exports to ChinaAround one-quarter of 2021 peak volumesContinuing downturn
• China tyre exports-9% YoYLatest available month; affected by input and shipping costs

Impact & implications

The report argues that China’s broadening export footprint is intensifying competitive pressure on traditional volume OEMs, especially in Europe and other import markets where China-made vehicles are gaining share. Potential European trade and localization measures may encourage Chinese OEMs and suppliers to build inventories and assembly capacity locally, while currency, commodity and shipping costs continue to influence relative competitiveness.

Risks

• Higher Brent- and rubber-related costs and elevated shipping costs are weighing on China tyre exports.
• Rising commodity and logistics costs may pressure automotive competitiveness and margins.
• European proposals on local content, minimum prices and hybrid tariffs could alter Chinese OEM and supplier trade strategies.
• Foreign-exchange movements remain a negative translation and competitiveness factor in many end markets and manufacturing locations.

What to watch

• Whether China vehicle export growth remains strong as domestic Chinese demand stays subdued.
• China’s import-share progression in Europe, Australia, Japan, India, Latin America and South Africa.
• European regulatory developments on local content, minimum prices and tariffs for hybrid vehicles.
• German vehicle-export trends to China and the US.
• Brent, rubber, shipping, aluminium and copper costs, as well as foreign-exchange movements affecting OEM competitiveness.
• Whether China auto-parts exports continue to grow and whether tyre exports stabilize.