One of the most important stories in automotive retail in 2025 is China’s accelerated influence on worldwide markets. Michael Dunne, CEO of Dunne Insights and host of the Driving with Dunne podcast, joins us on the latest episode of Inside Automotive to break down what the rapid expansion of Chinese automakers means for manufacturers, dealers, and suppliers as the industry heads into 2026.
China has moved from a marginal exporter to a global force in just five years. Dunne said Chinese automakers exported roughly 1 million vehicles annually in 2020, but in just five years, that figure is tracking between 7 million and 8 million units, surpassing the peak export levels historically achieved by Japan and Germany. Dunne described the growth as unprecedented, noting that no other country has scaled exports that quickly.
While Chinese vehicles remain largely absent from U.S. showrooms, they are rapidly gaining ground elsewhere. Dunne identified Mexico as the largest destination for Chinese exports, with hundreds of thousands of vehicles entering the market. In the United Kingdom, Chinese brands already account for about 13% of new vehicle sales, a figure Dunne said could reach 30% within a year. Similar growth is underway in Australia, Southeast Asia, and the Middle East.
Domestic pressure
In China, the market has become intensely competitive, with Dunne describing the environment as a price war in which few automakers are profitable. BYD, the country’s largest automaker, has seen domestic sales decline for three consecutive months amid competitors’ gains in market share. As a result, Chinese manufacturers are turning outward, where exports offer stronger margins and growth opportunities.
According to Dunne, Japanese automakers are absorbing the brunt of China’s export push, particularly Nissan and Honda. While Toyota has held its position so far, pressure is mounting. Korean brands are also affected, though to a lesser degree. Conversely, U.S. automakers, Dunne notes, are less exposed because they have largely withdrawn from many global markets outside North America.
"The Americans would also be suffering too, but the reality is that GM, Ford, & STellantis have largely withdrawn from most global markets."
Chinese automakers are increasingly attracting buyers, primarily due to competitive pricing and enhanced vehicle quality. Dunne highlighted this, citing examples such as BYD’s Shark plug-in hybrid pickup, priced between $40,000 and $45,000 in Mexico, and smaller, more affordable city cars starting at around $20,000. Additionally, Dunne emphasizes affordability as a major draw, especially compared with the average new-vehicle price in the U.S., which is close to $50,000.
Chinese brands gaining momentum
Notably, Dunne identified three Chinese automakers to watch in 2025: Xiaomi, Xpeng, and Leapmotor. Xiaomi, best known for consumer electronics, has quickly gained traction with stylish EVs. Xpeng is expanding through partnerships with Volkswagen, while Leapmotor is working with Stellantis to enter European and global markets.
Further, China’s $1 trillion trade surplus is raising alarms among governments, particularly in Europe, where officials are concerned about a flood of low-cost imports. Dunne said tariffs remain a key policy lever, but reactions have been muted in some regions because access to the U.S. market remains highly profitable for foreign automakers.
What’s next?
Looking ahead, Dunne said one or two Chinese automakers are likely to begin manufacturing in North America within five years, possibly through joint ventures with U.S. brands. He said Chinese companies are prepared to prioritize long-term market share over short-term profitability and would likely locate production in southern states to manage costs.
Nonetheless, Dunne views the rise of Chinese automakers as a structural shift in the global automotive industry. These brands, characterized by low production costs, rapid development cycles, and sophisticated software, are compelling established automakers to fundamentally re-evaluate their strategies. Therefore, Dunne stresses that for U.S. manufacturers and dealerships, the key challenge in 2026 will be the speed of their adaptation to intensifying global competition.
