China Set to Overtake Japan as World’s Top Auto Seller in 2025

For the first time, Chinese automakers are set to become the world’s biggest sellers of new cars in 2025, ending more than 20 years of Japanese dominance. It marks a decisive shift in the global automotive landscape, according to Nikkei China.

The findings are based on company disclosures from Jan to Nov 2025 and data from S&P Global Mobility, compiled by Nikkei China. The figures cover both passenger and commercial vehicles sold domestically and overseas.

China’s global vehicle sales are expected to rise 17% year-on-year to about 27 million units. After becoming the world’s largest car exporter in 2023, the country is now on track to lead overall sales as well.

That momentum is being driven by electrification. EVs and plug-in hybrids (PHEVs) now account for about 70% of automakers’ sales in China, supported by strong policy backing. Nearly six in 10 passenger cars sold are new energy vehicles.

Japanese automakers, meanwhile, are expected to post flat sales of around 25 million units, pushing them into second place. At their peak in 2018, Japanese brands sold close to 30 million vehicles globally.

The speed of the shift is striking. Just three years ago, Japanese automakers were ahead by roughly eight million vehicles. That gap has now disappeared, reflecting China’s rapid expansion and growing pressure within its domestic market.

However, this has led to signs of oversupply becoming more evident, with major players such as BYD cutting prices to stay competitive.

The fiercest competition is in the RMB100,000 to RMB150,000 (RM58,000 to RM87,000) segment, which now accounts for nearly a quarter of new energy passenger vehicle sales, with margins under increasing pressure.

The solution, export as a release valve. Chinese automakers are increasingly shipping surplus vehicles overseas, a trend that some markets have criticised as “deflationary exports”.

ASEAN has emerged as a key destination. Chinese car sales in the region surged 49% to about 500,000 units, directly challenging the long-standing dominance of Japanese brands.

Thailand illustrates how quickly the balance is shifting. As of Nov 2025, Japanese cars accounted for 69% of new vehicle sales, down from around 90% five years ago.

Here at home, Malaysia is feeling similar pressure too. As EV adoption picks up, Chinese brands are gaining attention with aggressive pricing and rapid product cycles, forcing incumbents to rethink cost structures and feature offerings.

Europe remains another major battleground. Chinese car sales there are projected to grow 7% to roughly 2.3 million units, even as trade barriers rise.

While the European Union has imposed tariffs on Chinese EVs, exports of PHEVs, which face fewer restrictions, are increasing rapidly and reshaping the region's export strategies.

Growth is also accelerating across emerging markets. Sales in Africa are expected to climb 32% to 230,000 units, while Central and South America are projected to rise 33% to about 540,000 units.

However, as Chinese automakers scale globally, resistance is building. The US and Canada have imposed tariffs exceeding 100% on Chinese EVs, while the EU has introduced duties of up to 45.3%, underscoring the growing pushback as global competition intensifies.