The Unthinkable Has Happened: China’s Automakers Eclipse Japan in Global Sales Volume

Is the automotive world turning upside down? For decades, the global auto sales crown belonged firmly to Japan. Now, data from 2025 indicates a monumental shift: Chinese automakers are projected to have sold approximately 27 million vehicles worldwide, surpassing Japan’s just under 25 million units.. This seismic change marks the end of over two decades of Japanese dominance and sends a clear signal to Detroit and Munich: the East has fully arrived. For Western investors and industry observers, this is not just a headline; it’s a fundamental recalibration of global manufacturing power.

The 2025 Milestone: By the Numbers

The projection, primarily sourced from Nikkei China and data from S&P Global Mobility, paints a stark picture of the rapid transition occurring in the auto sector.

• China’s Volume: Projected 27 million units globally (up 17% year-on-year).
• Japan’s Volume: Projected just under 25 million units, marking flat sales from their 2018 peak of nearly 30 million.
• The Gap Closed: The roughly 8 million-unit lead Japan held over China in 2022 vanished in just three years.
• Market Leaders Emerge: BYD and Geely are now firmly positioned within the top ten global automakers by sales.

H2: The Electrification Engine Driving China’s Ascent

What is the single biggest factor fueling this historic surge? Electrification. The shift to New Energy Vehicles (NEVs) is deeply embedded in China’s domestic market structure, creating an environment of hyper-competition and rapid technological iteration.

H3: The Home Field Advantage

Approximately 70% of total Chinese automaker sales in 2025 are expected to come from the domestic market, which is overwhelmingly NEV-focused.

• In China’s passenger car segment, Electric Vehicles (EVs) and Plug-in Hybrid Electric Vehicles (PHEVs) account for nearly 60% of sales.
• This domestic saturation, driven by policy support and subsidies, is creating an oversupply that forces manufacturers to look outward.
• See our analysis on the implications of Chinese subsidy structures for Western OEMs.

H3: Export as the Release Valve

Faced with intense domestic price wars, Chinese brands are aggressively shipping this surplus overseas. This is the ‘deflationary export’ phenomenon that has Western trade bodies concerned.

• Chery is highlighted as a key exporter with significant overseas growth.
• BYD, for instance, more than doubled its EV exports from 2024 to 2025 (reaching over one million units).

H2: The Global Battlefield: Emerging Markets Feel the Heat

The impact of China’s export push is being felt most acutely in regions traditionally loyal to Japanese brands. Despite mounting import tariff pressures from the US and EU (up to 45.3% in Europe), Chinese brands are making significant inroads globally.

• Europe: Projected Chinese brand sales of 2.3 million units, defying tariffs.
• Latin America: Sales projected to jump 33% to 540,000 units.
• Africa: Sales projected to rise 32% to 230,000 units.
• Southeast Asia (Japan’s stronghold): Sales are projected to surge 49% to approximately 500,000 units, with reports showing Japanese market share in Thailand falling from 90% five years ago to 69%.

H2: Analysis: Why This Matters to Western Investors

This shift represents a ‘Quartz Crisis’ moment for legacy automakers, similar to how Japanese efficiency challenged Detroit in the 70s. Japan’s sales decline is linked to lagging in the EV transition and losing share in its domestic market against local brands.

For US/EU stakeholders, the key takeaway is the speed and the technological core of China’s rise. Chinese automakers lead in core electrification components like batteries and power electronics, enabling rapid product cycles and cost advantages that challenge incumbents who still rely heavily on Internal Combustion Engine (ICE) expertise. The pressure is now on Western OEMs to aggressively streamline their EV cost structures or risk being relegated to a smaller market share, much like Japanese brands are now experiencing in China itself.

The data confirms that the global automotive pecking order has been officially redrawn, with China claiming the top spot. The challenge for the West is whether it can adapt quickly enough to compete with this new EV-led powerhouse. This story is covered by major outlets like Reuters and Bloomberg, underscoring its global significance.