This piece became a bit of a sprawling lengthy one so I decided to split it up into three pieces, to aid both my editing and your reading. Part 1 covers the global level introduction, and then the Asian and Australasian region. Part 2 covers the North American region and Part 3 Europe.

Global Overview

What happens in Asia+Australasia will decide the fate of the major car manufacturers. In 2024, the Chinese EV market represented more than two thirds of the global EV market, as EVs took a more than 50% share of the largest car market in the world (25 million yearly sales). VW and Toyota managed to limit their drop in sales to about 10% by taking a bigger share of the shrinking Chinese internal combustion engine vehicle (ICEV) segment, while General Motors and Honda sales collapsed by around 25%, Nissan by 15%, BMW and Audi (part of the VW group) by nearly 20%. With the ICEV segment shrinking again in 2025, to possibly only 30% of the Chinese car market, VW and Toyota will not be able to repeat that performance. And the pain will be even worse in 2026; VW and Toyota may be the only sizeable foreign brands left in the ICEV segment, but that segment will be much smaller by the end of 2026. At the same time, the fight for that shrinking segment will intensify - driving out any profitability.

ASEAN markets such as Indonesia and Thailand are also rapidly growing (and the Western car brands are also being pushed out of there by the Chinese), and India (currently dominated by Suzuki, Hyundai, Tata and Mahindra) has a huge potential for cheaper mass market models. It will be interesting to see if the thaw in China-India relations stretches to the significant entry of Chinese car manufacturers into India, something India desperately needs to help develop its automobile manufacturing supply chain; especially for EVs. Without a presence in the Asia+Australasia market, manufacturers will become regional at best players without the scale and ecosystem efficiencies of those that do have such a presence. Without a presence in China they will be continuously left behind by the rapid changes in a market that represents the leading edge, and two thirds, of the global EV market.

The South Korean and Japanese markets are protected by many “non-tariff” barriers, with the former at 1.7 million sales and the latter at less than 5 million sales. The EV share of both markets is extremely low. Although this may change as the Chinese brands are starting to sell EVs in both South Korea and Japan; creating disruption for the South Korean and Japanese manufacturers even in their home markets. Both countries are already high income nations with rapidly ageing and diminishing populations with the future reality of stagnation at best. Both are dominated by the national car makers, Hyundai-Kia in South Korea and Toyota, Honda, Nissan, Subaru, Mitsubishi etc. in Japan. These car makers are dependent upon much larger overseas sales to maintain financial viability.

The US market of just under 16 million sales is dominated by trucks and SUVs, and together with the distances driven (public transport is nearly non-existent) this places a significant limitation on the speed of EV adoption. Even with significant federal and state fiscal support the US BEV market only grew by 10%, to reach a share of 8.5%, in 2024. With the prospect of the Trump administration removing all federal fiscal support, combined with the Biden-administration imposed 100% anti-China EV tariff, the prospects for the EV market in the US are dim. The US is in danger of turning into an ICEV island left behind by the rest of the world, with a relatively stagnant level of sales.

The European car market at 13 million sales is also stagnant, with the move to EVs losing most of the state fiscal support that it previously had; EV sales in Europe actually fell in 2024 with an EV market share of 23%. The incremental upward ratchet yearly change in the UK mandated EV market share, together with the new 2025 EV mandate in the EU, will drive an increase in EV sales in 2025. However, without the previous state fiscal support that growth may be profitless at best for the car manufacturers. The EU has moved to protect its domestic manufacturers through anti-China EV tariffs, but this is only a stop gap as Chinese manufacturers increasingly open production plants in the EU. In addition, the prospect of Chinese retaliation against the EV tariffs may result in a reduction of those tariffs. The high cost of electricity in Europe also negatively affects the cost/benefit of EV vs. ICEV.

This infographic from the web site “Visual Capitalist” shows the regional distribution of sales of the major global manufacturers, although there is an error for VW - its 2023 China sales were 33% of its global sales not 45%. Some of the other numbers are also off a bit, but not meaningfully so. Even with these errors though, it provides a good visual display of the regional sales structure of each major manufacturer.

 

GM and Ford have already pretty much retreated to North America, the German big three are all Europe+China plus a lesser amount in North America, the Japanese more evenly split between China, Japan (the majority of Rest of Asia), and North America, and the South Koreans (Hyundia-Kia) heavily dependent upon their home market (the majority of their Rest of Asia), then North America, then Europe. The rapid drop in foreign car sales in China will change the above significantly. The 2024 global sales numbers for the largest car manufacturers, with an estimate for December sales in some cases:

1. Toyota: 11.1 million (1.5 million sales in China)

2. VW: 9.2 million (3 million sales in China)

3. Hyundai-Kia: 7.3 million (445,000 sales in China)

4. Stellantis: 5 million

   1. 1.5 million in North America

   2. 1 million in South America; Fiat-Peugeot-Citroen 750,000 and Stellantis-NA sales of 250,000, the vast majority locally produced

   3. 2.3 million in Europe-Middle East North Africa (MENA)

1. General Motors: 4.4 million (673,000 sales in China)

   1. excludes SAIC-GM-Wuling sales as GM has a minority stake

2. Ford: 4.4 million (211,000 sales in China)

3. BYD: 4.27 million

4. SAIC: 4.1 million

   1. includes SAIC-GM-Wuling sales of 1.34 million

   2. has foreign JV brand sales of 1.81 million; VW (1.14MM) & GM (673M)

   3. SAIC-Motor (MG) sales of 707,000 are overwhelmingly foreign

5. Honda: 3.8 million (820,000 sales in China)

6. Geely: 3.4 million

7. Nissan: 3.3 million (600,000 sales in China)

8. Suzuki: 3.2 million

9. Changan: 2.7 milllion

   1. has foreign JV sales of 260,000; Ford & Mazda

10. Chery: 2.6 million

11. Dongfeng: 2.5 million

    1. has foreign JV sales of 1.2 million; Honda, Nissan & Peuguot-Citroen

Not in the top 15 but with a market capitalization greater than all of the other car makers due to the bubble in its stock price, Tesla with 1.79 million sales in 2024; a fall of 1% vs. 2023 (662,000 sales in China, 623,000 sales in the US, 327,000 sales in Europe)

With the rapidly falling sales of the foreign manufacturers in China the list of truly global players could shrink fast in 2025 and 2026; with the added challenge of the rapid expansion of Chinese brands across Asia, Australasia, MENA, South Africa and South America. Toyota’s China sales in 2024 were about 1.5 million, while VW’s were about 3 million, Honda’s were 820,000, Nissan’s about 600,000; 13.5% of Toyota’s global sales, one third of VW’s, 21.5% of Honda’s and 18% of Nissan’s.

Already, Honda has announced a merger with Nissan and Mitsubishi; creating another “combination of failures” to add to that of Stellantis. The latter is really two (or even perhaps three) completely separate car companies, and from January onwards I will treat it as such; Stellnatis North America and Stellantis Europe-MENA, and also perhaps Stellantis-South America. Below is what I see as the regional trends between 2024 and 2026 for the top manufacturers.

2024 Global: Toyota, Honda-Nissan-Mitsubishi, VW, Hyundai-Kia, BMW, Mercedes, Geely, Chery, Tesla, SAIC.

• 2026: Hyundai-Kia, Geely, Chery, SAIC, Dongfeng, Changan, and Tesla are global (although Tesla may be only a niche player outside North America and Europe)

• 2026: Toyota and Honda-Nissan-Mitsubishi become global minus China

• 2026: VW, BMW, Mercedes become Europe plus an offshoot in North America

2026: BYD will still be a China/Asia-focused company, with relatively small foreign sales. Set to change in 2027 as BYD has to look to foreign sales for growth outside the EV-saturated Chinese market.

2026: The North American players of GM, Ford and Stellantis NA will remain so

2026: Stellantis Europe-MENA and Renault remain Europe plus MENA, but Stellantis-South America is also becoming an independent and successful entity (a bright spot among so much Stellantis failure).

• With collapsing sales in Europe, and growing sales of locally produced models in South America, Fiat has become a predominantly South America company. Peugeot and Citroen have also been growing their South American production and sales. Stellantis has a thriving Fiat-Peugeot-Citroen locally produced business with 750,000 sales in 2024. A separate Stellantis-South America?

• Stellantis brands Peugeot-Citroen and Vauxhall-Opel remain predominantly Europe-MENA

2026: Suzuki remains as India plus Japan plus Europe

By the end of 2026 foreign brands will have been decimated in the Chinese market, with EV sales at saturation levels, and the Chinese brands also dominant across Asia and Australasia (minus South Korea and Japan). Going into 2027 the Chinese manufacturers will have also ramped up their local manufacturing in Europe and South America while also targeting non-EU European markets (e.g. UK and Norway) and South America for a big export push. A large question will be whether or not the Trump administration will allow for domestic Chinese production plants (in addition to the grandfathered GM-Volvo plant); if so, this could spell disaster for the NA-only and Japanese and South Korean brands in the medium term. Such Chinese plants would also be aided if the Trump administration removes all EV state fiscal support, as that would level the playing field between Chinese and non-Chinese US manufacturing plants.

There is also the possibility of further brand mergers, as has recently taken place with the Honda-Nissan-Mitsubishi merger, which was really the weakening Honda rescuing Nissan from bankruptcy; a merger of failures just like Stellantis. Nissan had previously stated that it had about 14 months to find an outside investor to bail it out. Honda will rue the day that it took on the failing Nissan, when it needed to focus all its efforts on saving itself.

What will be a shock to many is how fast the profitability of markets collapse, as the players fight over a shrinking ICEV space (especially in China) while having to produce an increasing number of EVs (especially in Europe) without the benefit of the Chinese EV supply chain that has been developed over two decades. The Chinese brands have already collapsed the profitability of the foreign brands in China, badly impacting groups such as VW that relied on China profits to subsidize others parts of the group (e.g. manufacturing in Germany). As North America becomes more and more important to the Japanese manufacturers that are seeing their sales collapse in China, we may see much greater price competition; quite different to the price gouging of the COVID years. Very bad news for a Tesla that made the US its overwhelming source of profits during the price gouging years. The same for Europe with respect to the German manufacturers that are watching their China sales collapse. As stated below, the legacy car manufacturers are dying and tariffs wont save them.

Below is a former GM executive who warns that the Chinese EV wave is unstoppable, although he incorrectly counts Tesla as being in the same position as the Chinese brands when in fact Tesla’s market share in the US has been falling y-o-y at a rate of about 7%; to less than 50% in 2024. Tesla’s sales fell in 2024 compared to 2023, while BYD left it in the dust in BEVs and much, much more in overall EV sales (BEVs and PHEVs). BYD outsells Tesla in China nearly six to one and makes money doing it.

 

 

GM’s China sales are currently being destroyed by the Chinese brands, and GM already exited the European market. The ex-GM executive deeply misunderstands the highly competitive nature of the Chinese social market economy, the lack of the sate “picking favourites”, and the current low level of Chinese state support - especially for private companies such as BYD. And the US state subsidy trough that Tesla has been feasting at for well over a decade, plus the help it also gets from selling EV credits and benefitting from European EV sales incentives. Of course, given his previous position and current consulting relationships he may find it hard to blame the gross incompetence and profiteering collusion of the Western car manufacturers. He “gets it” but doesn’t really “get it”.

Asia

• China brands: 71.3%

• Foreign Brands: 4.8%

This problem does not just affect the foreign manufacturers, but the state-owned car manufacturers that have large joint ventures with those foreign manufacturers. Such as SAIC, GAC, Dongfeng and Changan, all of which have a huge challenge to replace those predominantly JV ICEVs with their own brand EVs. Many of their own brand sales are also ICEVs. Quite the opposite of a BYD that has no JVs and stopped producing ICEVs years ago.

BYD was a big winner, growing at a slightly faster rate (42%) than the overall Chinese EV market, although its China sales growth seemed to flatten out in the fourth quarter; with Chinese sales actually falling in December vs. November. Maintaining more than a one third share of a market growing so rapidly, and with such brutal competition, would tax any organization. It will be interesting to see if BYD can maintain the same sales growth momentum in 2025; notably it started cutting prices toward the end of December, perhaps the start of a new brutal price war? In early January BYD started pre-sales for its Seal 05 Dm-i PHEV sedan, starting at the equivalent of US$12,250 and will be shortly introducing its luxury Xia PHEV MPV for the equivalent of US$40,000, producing more pain for the purveyors of equivalent ICE and non-plug in hybrid (HEV) vehicles that are at the same price point.

BYD’s focus on its domestic market share in such a fast growing market has significantly limited BYD’s exports, which represent less than 10% of its overall sales. Including exports of 417,200, BYD delivered 4.27 million cars in 2024. Only when the Chinese market is saturated may BYD become an export powerhouse. In the interim its factories in Brazil, Thailand, Turkey and Hungary will be driving foreign sales as much as exports as they come on line.

Geely was the biggest winner in 2024 with its domestic EV sales growing much faster than the overall EV market, while its overseas sales also saw success. It has been releasing one winning product after another, across its Geely, Galaxy, Zeekr, Volvo, Radar and other brands. Geely Auto which includes the Geely, Galaxy, Zeekr and Radar brands (but not Geely-Volvo) sold 893,000 EVs in 2024; an increase of 83% over the previous year. Zeekr (the premium EV subsidiary) had a fourth record delivery month in a row in December, selling 27,000 vehicles for the month and 222,000 for the year (up 87%); with sales momentum building into the new year. Total 2024 Geely Auto sales were 2.22 million, growing over 25% y-o-y, of which 410,000 were exported; the growth in EV sales more than offsetting a drop in ICEV sales. Geely Holdings (which includes Geely-Volvo) sold 3.4 million vehicles in 2024, a growth of 20% y-o-y (Volvo sales grew 9% y-o-y, with half being EVs). Proton of Malaysia, in which Geely holds a 49.9% stake, saw its sales grow by 20% and retained its place as the second best selling brand in Malaysia.

Unlike BYD, Geely has sales momentum heading into 2025. Geely also both exports vehicles and produces vehicles at its Geely-Volvo plants in Europe and the US. This has allowed it to somewhat sidestep the anti-China EV tariffs by moving production for sales in Europe and North America to its non-Chinese plants; which did produce some delays, as with the EX30. Some of Geely’s recent new products below; a US$12,000 super-mini, a US$14,000 pickup, a US$17,000 Galaxy E5 compact SUV that bests the BYD Yuan Plus, a US$28,000 Lynk & Co. Z10 sporty sedan, the revolutionary Zeekr Mix people carrier for US$40,000, and the Zeeky 7X Model Y competitor for US$32,000. US and European consumers can only dream of such price/functionality combinations.

The state-owned manufacturers, which produce significant volumes of ICEVs both for their own brands and the JV brands they have with foreign manufacturers, are struggling to replace declining ICEV sales (both from their own and JV brands) with increasing EV sales. SAIC was hit by the collapse in sales of its joint venture with GM, a fall in the sales of SAIC own and SAIC-GM-Wuling (small EVs) brand cars, and the lesser fall in sales of its joint venture with VW, together with the extra hefty anti-China EV tariffs placed on its exports (under the MG brand) by the EU.

In 2024 SAIC’s overall sales went down by 20%, to just over 4 million; with SAIC-VW sales down to 1.148 million (from 1.215 million), SAIC-GM sales down to 673,000 (from 895,000), SAIC Motor (MG) sales down to 707,000 (from 986,000), and SAIC-GM-Wuling sales down to 1.34 million (from 1.4 million). The sales fall was limited by the much lesser falls in SAIC-VW and SAIC-GM-Wuling sales, but the former may decline much more in 2025 as the ICEV segment continues to shrink. SGMW (which SAIC owns 50.1% of) had a bad start to 2024 but recovered somewhat later in the year and has sales momentum going into 2025. Exports and sales of EVs were were flat year over year. One bright spot was the performance of the IM brand, in which SAIC owns a majority stake; it saw annual sales rise of 71% to 65,500. Overall, SAIC faces an extremely challenging 2025 where its increased EV sales will most probably not offset the fall in ICEV sales.

A possibility is that SAIC buys GM out of its 44% share of SGMW, as SGMW becomes more and more important to SAIC due to continued falls in its own and JV brands; with the fall in SAIC-GM sales, GM may be more open to selling its SGMW stake (it has already exited the European market). The vast majority of SAIC Motor sales are overseas sales of MG (Chinese sales of the MG brand have collapsed); outside of the foreign JVs and SGMW, SAIC has a very small footprint in China. It needs to rapidly arrest the fall in MG sales due to its punitive treatment by the EU with respect to the anti-China EV tariffs. By the end of 2026 SAIC may be predominantly SGMW, MG and IM. The irrelevance of an “affordable Tesla Model 2” to the Chinese market is shown by SGMW; from which you can already buy a Wuling Mini EV 4 door for the equivalent of US$6,800, or a slightly larger Wuling Binguo for US$8,000. China is already flooded with affordable, and even ridiculously cheap, EV models.

Dongfeng sold 2.42 million vehicles in 2023, including 780,000 Nissans and 594,000 Hondas (and 78,000 Peugeot-Citroen), and has therefore been very badly hit by the significant drop in sales at its joint ventures (Honda down nearly 30% and Nissan down 13%). However, this drop has been met with a surge in Dongfeng’s own brand sales (1.37 million, up 37% y-o-y) and EV sales (860,000 up 70% y-o-y) with overall sales growing slightly to 2.5 million in 2024; with a target of 3 million for 2025. A company successfully transitioning from ICEV to EV, and foreign-brand to own-brand. Dongfeng owns the Voyah EV brand.

GAC has seen its sales in 2024 fall as the sales of its GAC Aion EV subsidiary saw a 14% drop in sales in 2024 to 413,000, together with the sales of its joint venture with Honda crashing by 35% (from 640,000 in 2023), and its JV with Toyota also seeing a sales fall of 15% (from 950,000 in 2023), and even its own brand ICEV sales falling significantly. After selling 2.5 million vehicles in 2023, GAC sold only 1.92 million in 2024 (of which 1.2 million were JV sales and 300,000 its own brand ICEV). With the lack of a breakthrough in the Aion brand, and probable further significant falls in the JV sales, GAC will most probably see a further sales decline in 2025 and 2026. It could end up as a takeover or bankruptcy candidate if it does not find a way of sparking major growth in its Aion EV brand.

The state owned Changan is a standout as it is having increasing success selling its EVs (from 470,000 in 2023 to over 700,000 in 2024) with its successful Deepal and Avatr (in conjunction with Huawei) EV brands, and it benefits from the small scale of the sales of its joint ventures with Mazda and Ford. In 2023 Changan sold 2.55 million vehicles (including 89,000 Mazdas and 233,000 Fords). In 2024 the company sold 2.68 million vehicles, with sales momentum increasing toward the end of the year and a 2025 target of 3 million; showing a successful transition from ICEV to EV sales.

Chery, owned by the Chinese Wuhu municipal government, is absolutely flourishing in both the domestic and export markets. Its positioning as a provider of low price / high functionality cars is paying off in the ICEV segment, and now increasingly in the EV segment. With models like this:

In 2023 Chery sold 1.88 million vehicles, over 50% higher than the previous year. That momentum continued in 2024, with sales up nearly 40% to 2.6 million; with sales of EVs growing by over 250% to 78,000 in the month of November 2024 alone. Chery is heavily export focused, but most of its growth in 2024 was due to the domestic Chinese market.

Great Wall Motors has been struggling to maintain sales in 2024; while top-level sales have remained about the same as the 1.23 million in 2023, there has been a huge amount of change within individual brands. The Haval brand that is focused on mainstream cross-overs and SUVs and represents just over half of all sales stagnated in 2024, while the second biggest brand Great Wall pickup sales fell by about 10% and the Ora EV brand sales collapsed by about 40%. Those falls were offset by a 20% jump in the Wey brand (focused on premium versions of Haval models) and a 40% jump in sales of the Tank brand which is focused on off-road SUVs. Nearly 40% of sales were exports (not exposed to the rapid Chinese move to EVs) and over a quarter were EVs. GWM Tank seems to be in the same space as Chery, offering very high spec vehicles for very affordable prices. It is becoming increasingly threatened by the success of the BYD Fang Cheng Bao off-road EV brand though, and has recently released the Tank 500 Hi4-Z hybrid off-road SUV in response.

The startups of Xpeng, Nio and Leap are finding some success but they are still relatively small scale players. Xpeng sales had stumbled badly at the start of 2024, but gained momentum that accelerated into the end of 2024 with new and improved models; it could more than double sales to 400,000 in 2025.

Nio’s year was a mirror image of Xpeng’s, and it could also see sales nearly double to 400,000 in 2025 through its successful new and updated models. This includes two new cheaper brands, the Onvo and the upcoming Firefly super mini.

Leap Motor stood out as it doubled sales from 2023, to nearly 300,000 in 2024. Its accelerating end of 2024 momentum could take sales as high as 600,000 in 2025; challenging Tesla.

Neta is in serious trouble with sales stagnating and then collapsing in fourth quarter, it may never recover. Li Auto grew sales by about a third in 2024 to 500,000, and has regained some of the momentum it lost early in the year. It could see sales grow further in 2025, perhaps to 700,000 (challenging Tesla), but is seeing increasing competition in the market segment that it had carved out for itself, with such rivals as the BYD Xia MPV and the Lynk & Co. 900. Any successful new Chinese segment will find many rivals leaping into the space very quickly, no company can remain both complacent and successful in China.

Huawei has been successful with its Aito JV (with Seres), and somewhat successful with its Luxeed JV (with Chery) and Avatr JV (with Changan). Xiaomi has found great success with its SU7, growing sales very rapidly and outdoing its increased sales target of 130,000 in 2024. With the introduction of the Model Y competitor XU7 in mid-2025 it may have a shot at half a million sales in 2025 (it has officially targeted 300,000 sales in 2025); the main limitation being production capacity. This would still though put it in a relatively niche position in the market until it adds a number of extra models.

Here is a good review of the Chinese product and brand highlights of 2024.

Below the outlook for major new Chinese EV models in 2025 is detailed, an intensifying nightmare for the Western manufacturers.

Excluding Tesla, the Western manufacturers still do not have a competitive EV in China (none ranked in the top 20 sellers) while the Chinese are about to up their game even more. With the ICEV segment falling below 50% market share in 2024, it may very well fall below 30% by the end of 2025 and perhaps as low as 10% by the end of 2026. VW and Toyota did manage in 2024 to limit their sales fall to about 10% by taking a bigger share of the shrinking ICEV China segment, but the rapid collapse of that segment will not facilitate such a strategy in the next couple of years. With so many domestic and foreign manufacturers fighting over the shrinking ICEV segment, it will also increasingly become a profitless and in many cases loss-making one. Tesla will see its market share shrink even more into niche territory, even with the face lifted Model Y and huge sales incentives (e.g. no money down 5-year financing at 0% interest), perhaps its sales will even decline y-o-y as the EV segment continues to boom but its competitors proliferate while it struggles to bring new models to the market?

Tesla struggled mightily as its refreshed Model 3 was beset with local competitors, most especially the Xiaomi SU7. At the same time more and more Model Y competitors also entered the market. Tesla sales were falling early in the year until it cut prices and offered 5 year 0% financing in the second quarter of 2024. Overall, Tesla sales were up only 8.3% in 2024 which was far behind the 35% growth in the overall market; resulting in a large fall in Chinese EV market share from 7.5% in 2023 to 6% in 2024 (5.2% in Q4 2024). As sales in the US fell by 5%, and in Europe by 10.5%, in 2024, China became the biggest selling market for Tesla and its only source of sales growth; a market where it breaks even at best. The early 2025 bounce from the face lifted Model Y may be very sort-lived as Xiaomi has announced its Model Y competitor XU7 for 2025. And other models such as the 2025 Nio Onvo L60 and 2025 Xpeng G6 are becoming increasingly available as production ramps up.

The focus on BEV-only models has also greatly impacted Tesla, as the PHEV segment has grown significantly faster than the BEV sector. Tesla’s pain seems small though compared to that of the other foreign manufacturers who suffered from falling sales as the ICEV segment shrank and they continued to have no meaningful position in the EV segment. In 2024, the share of foreign manufacturers in the Chinese car market will have fallen to only about 30%, compared to 53% only two years earlier; and that includes Tesla! That share will fall further in 2024 and 2025, perhaps to single digits.

Volkeswagen (VW) was the dominant player in the Chinese market not so long ago, but has seen its sales go into a continuous decline. A decline that looks set to continue as it still has no meaningful position in the growing EV segment. In 2017 nearly half of VW’s global sales of 10 million were in China, in 2023 its China sales were 3.2 million. In 2024 Chinese sales fell by a further 10% to around 3 million (out of 9 million global sales), a fall limited by VW taking a bigger share of the shrinking ICEV segment. VW, as a purveyor of more low gas consumption cars, also benefitted from the Chinese government incentives to scrap older gas guzzlers brought in toward the end of the year (as also did Toyota). The sales fall will accelerate as that segment collapses at an increasing rate.

Toyota sold 1.7 million cars in China in 2023, just over 10% less than in 2019. In 2024 sales fell about 10%, as like VW, Toyota took a bigger share of the contracting ICEV segment. With Toyota having even less competitiveness than VW in the Chinese EV market, its sales fall acceleration may be somewhat greater than VW’s as the ICEV segment utterly collapses in the next two years. It simply waited far too long to embrace EVs, while it wasted many billions on hydrogen fuelled vehicle development.

BMW has had a terrible 2024, with sales falling to about 675,000 from 825,000 in 2023 (out of 2.56 million global 2023 sales, including the Mini brand). BMW’s attempted first half sales drive through massive discounting cheapened the brand and destroyed profit margins more than boosted sales. It rescinded those discounts, with sales responding with a 30% y-o-y slump in the third quarter of 2024 (partially due to deliveries being delayed due to a fault in the braking system). A good insight into the problems of BMW in China is given by this review of the Huawei M9, which outsells the X5 three to one.

Mercedes had a terrible time with its EQE EV sedan, which sold hardly any units toward the end of the year even after 50% discounts! It sold 737,200 vehicles in China in 2023, but by the third quarter of 2024 sales were down 13% y-o-y. With falls in sales of EVs, and a sales mix moving away from the more expensive vehicles such as the S-Class, things do not look auspicious for Mercedes-Benz in China in 2025.

The impacts on BMW and Mercedes (and VW owned Audi) will intensify in 2025 as multiple Chinese brands move up market to directly target their more expensive models; with industry leading price/functionality combinations such as the Denza Z9, Zeekr 009, Nio ET7 and ET9, Denza N9 and Yangwang U7. This year may be the major turning point in the end of the German luxury brands in China, and Asia as a whole. In December, the luxury segment had only a 33.9% EV share, so it is ripe for a Chinese EV brand invasion.

The ET9 will start deliveries in March 2025, with a base price of 788,000 RMB (US$108,000), with the limited edition (priced at RMB 818,000) sold out on day one of the ability to order. These prices are well below comparable German luxury models, such as the Porsche Panamera (from RMB 1,138,000 for ICE), Mercedes S-Class, and BMW 7-Series (from RMB 828,000 for ICE, RMB 1,459,000 for the electric i7). The Denza N9 and Yangwang U7 reviews below start at 12.35.

And for the more mass market mid-range Mercedes, BMW and Audi SUVs, there is competition from the likes of the Avatr 07, priced between US$30,000 and US$40,000; offering much better price/functionality combinations.

One very big problem for the German manufacturers is that they are very weak in the area of technology within the cars, an area the Chinese manufacturers excel in and one that is very important to Chinese car buyers.

Here is Merceds-Benz attempting to blame a “weakening Chinese car market” (that market actually grew 4% y-o-y in the first 11 months), and a Chinese turn away form luxury cars when in fact they are turning away from German luxury brands.

With Mercedes being especially behind on EV models (including their disastrous EQE and EQS models) they may be the most heavily impacted in the next 2 years of the move to EV market saturation. The German manufacturers also tend to import their most expensive ICE vehicles, which leaves them open to Chinese retaliation against the European anti-China EV tariffs; the Chinese could simply put a tax on big ICE engines for environmental reasons!

General Motors has also had a bad 2024, with SAIC-GM sales falling to 673,000 (excluding SAIC-GM-Wuling in which GM does not have a controlling stake), from nearly 900,000 in 2023 (out of 4.8 million globally). In December of 2024 GM took a US$5 billion write down on its joint venture with SAIC.

Honda (GAC-Honda and Dongfeng-Honda) has had a disastrous 2024, with sales falling by nearly 30%, from 1.23 million in 2023 (out of 3.7 million globally), with it quite possibly destined to exit the Chinese market in the next couple of years. Nissan sales in China (Dongfeng-Nissan) have been falling since 2018, when its sales peaked at nearly 1.6 million (out of 5.8 million global sales). By 2023 they had halved to 794,000 (out of 3.44 million global sales), and in 2024 they fell again by nearly 15%; on the same trajectory as Honda. Soon to be merged into the same company!

Ford’s China fell slightly (Changan-Ford) to about 211,000, while its CEO sang the praises of the Xiaomi SU7, and Mazda’s sales are also at a very low level. The latter may follow Mitsubishi (soon to be part of the merged Honda-Nissan-Mitsubishi) who in November announced that they are pulling out of China.

Hyundai-Kia China sales peaked in 2014 at nearly 1.5 million, and had fallen to around 445,000 (Hyundai 245,000 and Kia 200,000) in 2023. In 2024 the two brands diverged markedly with Hyundai sales down 40% while Kia sales are up 60%; with the two nearly offsetting each other. The firm needs to be successful in China, to maintain a presence in the largest and fastest growing EV market in the world; and it is investing heavily in its Chinese presence.

The foreign manufacturers inhabit the shrinking ICEV island while having little or no position in the expanding EV sea. As the island gets smaller, its percentage rate of shrinkage accelerates. In 2023 ICEVs had 63% of the Chinese market, but in 2024 only 50% (a drop of 21% in ICEV sales assuming a stable overall market). Even if EV sales growth slows to 30% in 2025, that means that the ICEV share will fall to only 35% of the overall car market which will mean a drop of 30% in ICEV sales (assuming a stable overall market). That’s an average, some manufacturers will do much worse and some better; and there are also Chinese manufacturers selling ICEV cars. Foreign car market share was only 30% in 2024.

With a further 30% growth of Chinese EV sales in 2026, the ICEV share will fall to only 15%, that’s a 57% drop in ICEV sales (assuming a stable overall car market). The foreign manufacturers only have until the end of 2025 to establish themselves in the Chinese EV space, otherwise they will to all intents and purposes be annihilated in 2026. Mitsubishi announced its exit from China in November 2024, and at current trends Nissan, Ford, GM, Mazda and Honda may not be viable by the end of 2025.

South East Asia & Australasia

In Australia specifically, where EVs represent 10% of the market, Tesla’s sales were down by about 35% y-o-y in the fourth quarter of 2024 as competition has greatly intensified. Mitsubishi is very exposed to such a trend as more than half of its sales are in ASEAN and Australasia (e.g. 275,000 in Thailand, 154,000 in Indonesia and 64,000 in Australia out of 1MM global sales); it already announced its exit from the China market. Here are all of the announced new EV models (68 of them) hitting the Australian market in 2025, including the entry of a number of additional Chinese brands; a market which shows what will happen to other Western car markets in the future.

In Indonesia just over one million light vehicles were sold in 2023, but these sales fell about 15% in 2024. Sales in Thailand are also falling, by 25% to 560,000 in 2024. In contrast Malaysia light vehicle sales were stable in 2024 at about 800,000 vehicles. The Chinese brands are bucking these falling and stable sales trends with increasing sales in the region. For example with BYD in Thailand, which grew sales by 7.6% in the first 10 months, claiming the #4 market share slot (passing Mitsubishi) behind Honda (sales down 19%), Isuzu (sales down 46%) and the number one Toyota (sales down 17%). Four out of five EVs sold in Indonesia are from Chinese brands. Geely also own a 49.9% stake in Proton, the second biggest car brand in Malaysia.

This reinforces the trend of the Japanese manufacturers becoming predominantly US+Japan, the South Koreans becoming US+South Korea, the German manufacturers becoming Europe+US and the US manufacturers being US+little else; excluded from the fastest growing car markets in the world. A trend exacerbated by the Chinese sales successes in Latin America, MENA and South Africa (e.g. Chery).

And in parallel those foreign manufacturers are increasingly using China as a low cost base with which to supply the markets outside of the US and EU tariff walls, reinforcing the Chinese manufacturing eco-system. The home factories will predominantly supply their local countries (Japan, South Korea, US) or regions (Europe) which are much slower growing or even stagnant, while the faster growing markets will be supplied from their Chinese factories. With only the US market currently protected from Chinese exports and/or local factory production.

Japan and South Korea

Both markets are stagnant to shrinking given the increasingly bad demographics of both nations. With North American sales being predominantly met with local production, and other export avenues shrinking, this can only mean a long term decline in the local car manufacturing production levels. The Chinese manufacturers are also making efforts to enter both of these markets with their EVs, which can only exacerbate the local production crisis for the Japanese and South Korean car producers.

Among the Japanese producers, only Toyota can be said to still be a global car company. But with the probable collapse of even its Chinese sales (falling 8% in the first 11 months of 2024 y-o-y) as the EV market share climbs upwards, Toyota will become predominantly North America and Japan focused with a European wing. The other Japanese manufacturers will be much more North America plus Japan focused, with the only exception being Suzuki with its 2 million sales in India. The collapse in Honda and Nissan’s Chinese sales is already having consequences, with the merger of Honda-Nissan-Mitsubishi; a merger of failures akin to Stellantis.

Hyundai-Kia is more geographically dispersed in its sales than even Toyota, but it is imperative that it becomes more competitive in the Chinese market where it has been in long-term decline. In 2024 it has held its own, but with greatly diverging fortunes of Hyundai (sales down 40%) and Kia (sales up 60%), and with no EV model in the top 20 selling list. The transformation of the Chinese car market, the largest in the world, into one saturated with EVs over the next two years will produce a number of super competitive manufacturers that can leverage their scale and product advantages across the global car market. H-K’s geographical diversification may protect it somewhat against this wave of Chinese brand competition, but it may also just delay an inevitable decline.

The same goes for the South Korean and Japanese EV battery manufacturers who have a tiny (LG is the only South Korean or Japanese manufacturer below) share of the Chinese EV battery market.

 

Leading them to lag further and further behind the Chinese at the global level. CATL, BYD, CALB, Gotion High-tech, Eve Energy and Sunwoda are all Chinese EV battery manufacturers, as are the majority of those in the “Others” category below. LG’s share fell from 13.9% in the first 11 months of 2023 to 11.6% in the first eleven months of 2024. The only other non-Chinese manufacturers below are SK On, Panasonic and Samsung SDI.

 

The decline of the Japanese, and perhaps somewhat slower decline of the South Korean, car manufacturing and related industries (e.g. batteries, electronics, robotics, advanced manufacturing) will have large geopolitical implications given the importance of both nations as US vassals in West Asia. This will produce much weaker vassals and also perhaps a move within the two nations to reconcile with China in an attempt to ameliorate the economic decline. One of course added to by the very negative demographics of both nations, a decline which will not significantly hit the Chinese working population for more than a decade.