China’s Car Market Turns Inward: Imports Plunge, Domestic Brands Surge

China’s automotive landscape isn’t just evolving — it’s transforming at a speed that leaves traditional global players scrambling for answers. In the first quarter of 2025, foreign car imports into China dropped by nearly 40 percent, highlighting a shift toward homegrown strength. Luxury brands still dominate the import charts, but even electric and hybrid newcomers from abroad are struggling to find traction.

Meanwhile, Chinese brands like BYD, Geely, and Changan are rewriting the rules at home. Their rise in both combustion and electric segments signals a deeper structural change: China is not just leading in NEV adoption — it’s setting new standards for competitiveness, affordability, and innovation.

At the Shanghai Auto Show, Great Wall Motors made headlines by rejecting extended-range technology altogether, betting fully on pure EVs and hybrids — a bold move in a market still debating transitional technologies. And beyond the mainstream, Xiaomi-backed China Car Custom just launched the SC01, an electric sports car that shows how diverse and dynamic China’s EV landscape has become.

The bigger picture is clear: China’s automotive future is increasingly self-made — and the rest of the world will have to adapt faster than ever before.

Let’s dive in.

Sebastian

Table of Contents

• Fewer Foreign Cars in China: What the Latest Numbe …

• BYD, Geely, Changan: How Chinese Brands Are Rewrit …

• Great Wall Motors Rejects Extended-Range EVs — A B …

• Xiaomi-Backed SC01: China’s New Affordable Electri …

Fewer Foreign Cars in China: What the Latest Numbers Reveal

While the world often focuses on China’s growing role as an automotive exporter, it is equally revealing to observe the country’s import dynamics. In the first quarter of 2025, China imported just 95,000 vehicles, marking a sharp year-on-year decrease of 39%, according to figures from the China Passenger Car Association (CPCA). March alone saw 39,000 imports, a 27% drop compared to the same month last year.

This decline continues a clear trend: from 1.24 million imported vehicles in 2017, volumes fell to just 800,000 in 2023, and further down to 700,000 in 2024. The average annual decrease of about 8% underscores how quickly China’s domestic auto industry is closing the gap once filled by foreign brands.

Luxury cars remain the backbone of imports. Passenger cars made up 98% of the volume in Q1, with 43% being sedans and 29% AWD SUVs. However, even new energy imports — often seen as a growth segment — are struggling: imports of BEVs and PHEVs fell by 82% and 77%, respectively.

A look at the leading countries reveals familiar names: Japan led with 30,517 imported vehicles, followed by Germany (23,695) and Slovakia (17,733). Notably, Slovakia recorded the largest quarterly growth (+1,931 vehicles compared to Q1 2024), hinting at shifting sourcing strategies. Belgium, Poland, Vietnam, and Spain also saw minor gains. Meanwhile, imports from the United States, ranked fourth, are facing headwinds: China recently imposed a 25% tariff on American car imports, likely reshaping future rankings.

Our take: In a broader sense, the decline in imported volumes reflects the growing competitiveness of Chinese brands — particularly in premium and electric segments — and highlights the geopolitical tensions that continue to impact trade flows. As the Chinese market becomes ever more self-sufficient, foreign automakers are being forced to rethink their strategies for staying relevant behind the Great Wall.

BYD, Geely, Changan: How Chinese Brands Are Rewriting the Rules

After taking a closer look at China’s shrinking vehicle imports, it becomes even more striking how rapidly the domestic market is evolving. In the first quarter of 2025, China’s automotive market grew by 6.0 percent year-on-year, reaching 5.1 million newly registered vehicles. Today, nearly one-third of all new cars sold globally are registered in China.

As in previous years, new energy vehicles (NEVs) — fully electric cars and plug-in hybrids — are the main growth drivers. Their sales increased by 36.4 percent compared to the same period in 2024, while combustion vehicles saw a sharp decline of 11.8 percent. In March alone, NEVs accounted for 51 percent of all new registrations, underscoring China’s shift toward electrification.

Two key trends are shaping the market

BYD’s continued dominance and the rapid rise of other Chinese brands, while German automakers are managing to slow down their recent losses. According to the Electromobility Report 2025 by the Center of Automotive Management (CAM), BYD stands out as the clear market leader. The company grew its market share from 3.5 percent in 2021 to 16.2 percent in 2024. Although its share slightly dropped to 13.6 percent in Q1 2025, BYD remains firmly at the top.

Volkswagen, the former long-term market leader, saw its share fall from 14.4 percent (2021) to 12.2 percent (2024) and stabilize at 12.1 percent in early 2025. However, Geely is now posing a serious challenge, growing its market share to 12.0 percent — nearly overtaking Volkswagen for the first time. Meanwhile, Toyota’s share declined steadily to 6.7 percent, and Changan maintained a stable 6.1 percent. Chery, on the other hand, achieved a remarkable rise to 6.6 percent.

General Motors continues to struggle, with its share plunging from 6.3 percent (2021) to 2.3 percent (2024). In contrast, BMW and Mercedes-Benz saw slight improvements, reaching 3.0 percent and 2.7 percent, respectively, though both remain well below their 2021 levels.

New Energy Vehicle Market: Local Players Take the Lead

In the booming NEV segment, BYD remains the unchallenged leader. The brand nearly doubled its market share from 17.6 percent in 2021 to 34.1 percent in 2024. Even though its share slightly dipped to 28.8 percent in Q1 2025, BYD’s dominance remains unbroken.

Geely continues its ascent, growing from 2.4 percent (2021) to 13.3 percent in Q1 2025. Changan also posted strong gains, expanding its share from 2.3 percent to 6.5 percent over the same period. Chery, meanwhile, increased its NEV market share from 2.9 percent in 2021 to 4.8 percent in Q1 2025.

Tesla’s position in China continues to weaken. The American EV pioneer saw its share fall from 9.7 percent (2021) to just 5.6 percent in Q1 2025. German brands struggle even more: Volkswagen captured only 2.0 percent of the NEV market in 2024, while BMW and Mercedes-Benz remain marginal players with shares under 1.0 percent.

In the first quarter of 2025, 47.2 percent of all new registrations were NEVs — up from just 14.8 percent in 2021.

Our take: China’s car market is shifting faster than global brands can react.

The first quarter of 2025 reinforces the growing divide between China’s domestic and foreign carmakers. Local brands are not only leading in volume but also setting the pace for innovation and affordability in the EV space.

Foreign automakers, especially those from Europe and the United States, must move faster to adapt if they want to stay competitive in a market that is shifting more rapidly than almost anywhere else in the world.

Great Wall Motors Rejects Extended-Range EVs — A Bold Move Against the Trend

After exploring the surge of local brands in China’s booming EV market, the latest developments at the 2025 Shanghai Auto Show reveal a growing divergence in strategy among Chinese automakers themselves.

Great Wall Motors has taken a firm stand against extended-range electric vehicle (EREV) technology. Senior Vice President Mu Feng recently declared that Great Wall Motors “would rather die than make extended-range vehicles,” calling it an outdated technological approach. This sentiment was reinforced by Chairman Wei Jianjun during his keynote at the Auto Show, where he emphasized that extended-range models are merely transitional solutions incompatible with the company’s long-term vision. Great Wall Motors will instead concentrate its resources on pure electric and hybrid technologies.

Mu Feng criticized EREVs for several reasons:

• They primarily rely on fossil fuels as their main energy source

• They have limited pure electric range due to small battery capacities

• They deliver inferior fuel economy compared to hybrids

• They offer lower performance levels than pure battery-electric vehicles

This sharp rejection stands in contrast to the strategy of companies like Li Auto, which continues to heavily promote extended-range models to Chinese consumers. It also diverges from opinions like that of Yang Yusheng, a respected academician from the Chinese Academy of Engineering. Yang believes extended-range vehicles are not merely a transitional phase but a future mainstay technology.

According to his forecasts, by 2027 extended-range vehicles could account for roughly one-third of China’s new vehicle sales, with their share growing further by 2030.

The broader market figures back up Yang’s view: while in 2021 only four EREV models existed, by 2024 more than 50 new models had entered the market. Even traditional players like Volkswagen are now considering extended-range technologies specifically for China, adapting to local preferences.

Our take: Extended-range EVs have their place — but only for those who master pure EVs first.

Extended-range technology undoubtedly offers a useful bridge in markets where charging infrastructure or consumer acceptance for full electric vehicles is still developing. In this context, EREVs can play an important transitional role. However, the key to long-term success lies elsewhere: OEMs must first demonstrate that they can build compelling, competitive pure electric vehicles. Without mastering this core technology, there is a real risk that efforts to pursue multiple technological paths — battery electric, hybrid, and extended-range — could dilute focus, stretch resources, and ultimately weaken their market position.

China’s EV market shows a clear pattern: only those brands that have built strong, scalable pure electric platforms have gained real market leadership. Extended-range models can complement a mature portfolio, but they cannot replace the need for true innovation in battery technology, efficiency, and user experience.

In many ways, Great Wall Motors’ firm rejection of extended-range vehicles underlines this lesson: it is not about short-term market opportunities but about laying the technological groundwork for sustainable leadership in the next phase of mobility. For European and other international brands, the message is clear: mastering one field first might be the better strategy before adding more complexity.

Xiaomi-Backed SC01: China’s New Affordable Electric Sports Car

After discussing strategic decisions around extended-range technologies, it’s worth briefly turning to a completely different corner of China’s evolving EV market — one that’s more about aspiration than mass adoption.

China Car Custom, a startup backed by smartphone giant Xiaomi, has officially launched its first electric sports car: the Small Sports Car SC01. Priced at 229,800 RMB (around 31,530 US dollars), the SC01 positions itself not for the mass market, but rather for a niche group of enthusiasts seeking something eye-catching and exclusive. The SC01 offers serious performance figures:

• Dual motors producing a combined 320 kW of power and 560 Nm of torque

• 0 to 100 km/h acceleration in just 2.9 seconds

• A top speed of 200 km/h

• A 60-kWh battery pack supplied by CALB, offering a CLTC range of 520 kilometers

At 4,106 mm in length and just 1,170 mm in height, the SC01 cuts a low, aggressive silhouette. It’s built by Jiangxi Jiangling Group NEV (JMEV) and represents an interesting move by Xiaomi — a company just starting to build its own EVs — to already support other players in the electric mobility space.

While the SC01 will likely remain a rare sight on Chinese roads, it highlights how EV innovation is touching even the premium and luxury segments. In a market dominated by SUVs and sedans, a pure electric sports car — even if it appeals only to a small niche — adds a new layer of dynamism to China’s automotive landscape.

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_{Sources: Cui Dongshu - China imported 30517 vehicles from Japan, 23695 from Germany, 17733 from Slovakia, in Q1 2025 / Elektroauto-News - Deutsche Autohersteller können Lage in China stabilisieren / CarNewsChina - Great Wall Motors “would rather die than make extended-range vehicles” because the technology is outdated / CNEVPost - Xiaomi-backed startup officially launches $31,530 electric sports car}