There are more and more overseas consumers who like Chinese cars. In terms of macro data, China surpassed Japan in exports of 5.221 million units last year, becoming the world's largest exporter of automobiles. In the first two months of this year, China's auto exports continued the trend of last year, with a total of 831,000 units, a year-on-year increase of 22.1%, and are expected to exceed the 6 million mark by the end of this year.
The increase in total exports is inseparable from the contribution of three main destination markets: Europe, Asia and Latin America. According to the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, the total sales of Chinese automobiles to these three markets reached 4.4 million last year, accounting for 88% of total exports. Among them, Europe was the market with the highest export volume, reaching 1.954 million units, a 130% y/y increase, and the Russian market contributed to this. Outside of the Russian market, Chinese car exports to Brazil are also growing rapidly.
Chinese electric cars are buying up in Brazil
According to the National Automobile Manufacturers Association of Brazil, the number of Chinese cars to Brazil increased by more than 300% year-on-year last year, making China the second largest source of car imports for Brazil. New energy vehicles (NEVs) are an important engine for the surge in China's total car exports to Brazil, with a report released by Brazilian consultancy Bright Consulting showing that Chinese EVs accounted for 35% of Brazil's total EV imports last year, and this proportion will continue to grow.
Sure enough, in the first quarter of this year, China's total exports of electric vehicles to Brazil increased by 450% year-on-year, according to data released by the relevant Brazilian authorities, Chinese electric vehicles accounted for 40% of the total imports of passenger cars in Brazil in the first quarter, which is equivalent to China's electric vehicles single-handedly carrying half of Brazil's new energy vehicle market.
One of the most direct reasons for this phenomenon is that in the first quarter of this year, the Brazilian government decided to raise import tariffs in order to encourage the development of the local auto industry. According to President Luiz Inácio Lula da Silva's vision, the import duty rate for pure electric vehicles will be raised to 10% from January, 18% in July and 35% in July 2026, and 15% for hybrid vehicles at the beginning of this year, 25% in July and 35% in July 2026.
You know, since 2015, the Brazilian market has implemented a zero tariff policy on imported cars for a considerable period of time, and now the tax rate has been suddenly raised, and another group of dealers are eager to import more inventory before the tariff rises further.
But the tariff policy is only part of the reason, behind the rising exports of Chinese automobiles, especially Chinese electric vehicles to Brazil,
It is the growing demand for regular and high-end electric vehicles among Brazilian consumers, and "the entry of Chinese automakers is precisely meeting this demand".
Before the arrival of Chinese car companies, traditional giants such as Stellantis, Volkswagen, General Motors, Toyota, Hyundai, Renault, Nissan and Honda had a total share of 83.76% in the Brazilian market, leaving little room for Chinese car companies to survive. However, the advent of the new energy era has opened a gap for Chinese car companies to enter the Brazilian market.
Previously, a survey by an agency showed that 89.7% of Brazilians want to own an electric car, but because the traditional car companies entrenched in Brazil are not willing to expand the production and sales scale of low-end electric vehicles, the current Brazilian car market is still dominated by fuel vehicles, which means that the Brazilian market has a large number of unmet demand for electric vehicles, which provides an opportunity for Chinese car companies.
In the Brazilian market, the best-selling electric vehicle brand is BYD. According to statistics from the Brazilian Electric Vehicle Association, in the first quarter of this year, BYD sold 14,939 electric vehicles in Brazil, accounting for 41.4% of the total sales of electric vehicles in Brazil in the first quarter. This was followed by Great Wall Motors, which sold 5,735 units in Brazil in the first quarter. The arrival of these Chinese brands has boosted the adoption of electric vehicles in Brazil, where sales in the first quarter of this year increased by 145% compared to the same period last year to 36,090 units.
From the product to the system
But while Chinese electric vehicles are sweeping Brazil, after-sales problems are becoming more and more acute. Take BYD, which is currently the largest exporter, for example, because its sales orders in Brazil in the first quarter of this year were too hot, resulting in its after-sales center in Brazil under great pressure.
In recent times, many Brazilian users have complained about the brand's after-sales service on social media platforms. Due to the lack of stock of aftermarket parts in Brazil, especially tires, many users are unable to replace suitable parts in a timely manner, especially tire replacement.
In fact, it's not a single brand issue. In the past, most of the tire replacement in the Brazilian market was handled by local tire suppliers, but due to the difference between the tires used in new energy vehicles and fuel vehicles, the previous new energy vehicle market in Brazil was not large, so the tire reserves of local suppliers simply could not keep up with the surging sales of electric vehicles.
This is a more or less wake-up call for Chinese car companies to go overseas, selling cars to the local market is only the first step, and after-sales service and localization level are more important steps to determine how far Chinese car companies can go on the road to go overseas. In the third quarter of last year, BYD announced that it planned to build 100 dealer offline stores in Brazil by the end of 2023, but according to the after-sales situation in the first quarter of this year, regardless of whether the plan for these 100 stores has been implemented on schedule, BYD needs to speed up the pace of after-sales layout in order to match the front-end sales growth.
In terms of localization, Chinese car companies have also started to deploy. Last year, BYD announced plans to build three new factories in Brazil, one of which opened in March this year, the first electric vehicle factory outside Asia, Great Wall Motor began a production line renovation of its Brazilian plant last year, and Chery has already built two factories in Brazil. In the future, as more Chinese automakers invest in Brazil, the localization level of Chinese automakers in Brazil will be further improved.
As the world's sixth-largest auto market, Brazil sells around 2 million cars a year, which is already of great significance to Chinese automakers who urgently need to absorb production capacity in overseas markets. What's more, the United States has recently frequently increased restrictions on Chinese cars, and Trump has threatened to impose 100% tariffs on cars produced outside the United States once he wins the presidential election in November. At this time, the Brazilian market, which is close to the United States and relatively friendly to Chinese cars, is a good alternative.
Or take BYD as an example, in the first quarter of this year, BYD exported a total of 97,899 new energy passenger vehicles, of which 15,340 were exported to the Brazilian market, accounting for 15.6% of BYD's total export sales in the first quarter. This somewhat reflects that in addition to Russia and Southeast Asia, the Brazilian market is also an opportunity that Chinese car companies must grasp today, when Europe has frequently launched investigations on Chinese electric vehicles and the United States has set up many tariff barriers. But if you want to be truly established in Brazil, you must not only be able to sell cars, but also do a good job of after-sales service and localization.