How the UK saved the Chinese car industry in 2026

China’s retail car market has slumped catastrophically in 2026, wiping out almost 2.5 million sales in the first seven months compared with the same period in the year before. But wholesales (sales to dealers) were nowhere near as badly affected, down 5.4% against the 20% retail slump. Making up the difference between the two were exports, which soared at a crucial moment to replace nearly all sales lost at home. China exported a record number of passenger cars this year. In the first half, 5.31 million cars left the country to be sold abroad, up 53% from the year before. In July the increase was even greater, up 88% according to figures from the China Passenger Car Association (CPCA). Exports “effectively stabilised” car industry sales this year, offsetting domestic weakness, the CPCA said in a statement. The UK was the third-largest destination for those cars, at just over one quarter of a million. Top was Russia, with almost 450,000, while Brazil was just behind at 411,00. Not every model is sold in the country in which it lands, but the UK figure tallies with Chinese brand sales plus those of models from non-local brands but which are built in China, like the Tesla Model 3. The sharp rise in exports did more than just replace sales lost in China; they also provided a more lucrative revenue stream to car makers just as they were getting lethally squeezed on pricing at home. Far from warning investors, Geely Auto Group (which includes the namesake Geely brand along with Zeekr and Lynk&Co) reported record revenue and profits for the first half of the year. Those cheering results were due to a 158% increase in exports to almost half a million in the first six months, accounting for one third of its total sales, the company said on its half-year earnings call. “This is the beginning of our world expansion,” new CEO An Conghui said. Crucially, those exports were sold at a gross profit margin 10 percentage points higher than those the sold in the company’s domestic market, An said. Also reporting an increase in gross profit margin in the first half was Chery, parent of Jaecoo and Omoda. Again, like Geely, the company attributed “the increase in sales in overseas markets… which carried higher gross profit margins than sales in the PRC”, according to a stock exchange filing. Stellantis-backed Leapmotor was another celebrating a rapid hike in exports, up 370% in the first half to just under 100,000 units, accounting for more than a quarter of its sales. “Overseas markets have become the company’s vital second growth driver,” it said in a filing. The relief offered by exports is enormous. China’s car market has long been a steaming cauldron of competition in which players have to cut costs, price low and further discount to survive, which erodes profits. Slumping sales just adds to the pain. Just compare newly released pricing for the BMW iX3, which starts at just 269,900 yuan in China (below £30,000). That’s for a China-specific model with cheaper lithium iron phosphate battery chemistry, but even the dual-motor iX3 40L xDrive starts at the equivalent of £32,699 – more than £20,000 cheaper than the UK equivalent. Selling abroad allows Chinese car makers to better price electric and plug-in hybrid models, which still lag on margin compared with combustion-engined equivalents. For example Chery, China’s second-largest exporter of ‘new-energy vehicles' (ie EVs and PHEVs) after BYD, posted gross profit margins for its NEVs of 12.8% this year, compared with 5.2% over the same period last year. Margins for Chery’s combustion-engined models, meanwhile, stood at 18.1%. Derisking from their home market is a core goal of China’s car makers. Geely Auto, for example, has a target to grow international sales to become two thirds of its total, up from one third currently. Now comes the hard part. China’s unprecedented export numbers have sent shockwaves through markets such as Europe, which has its own car industry. Chinese models may be priced higher in Europe than they are in their home market, but they are still below those of local players and luring away customers with better features and more attainable electrified tech at a time when the prices of petrol and diesel have soared. Protectionism is the name of the game these days. The European Union has applied extra tariffs on EVs and is mulling doing the same for plug-in hybrids, while the US has in effect banned them with 100% tariffs. Chinese players realise that long-term growth comes from building where they sell. “If two-thirds of [our] sales will come from the overseas market, then localised production will become the reality,” Geely’s An said. The company has inked deals with Ford in Spain, Volvo in Europe and Renault in Brazil and Korea to build its models outside of China. The EU is encouraging that process with the Industrial Accelerator Act, but a big question remains: can Chinese car makers replicate their free-wheeling, fast-paced, low-cost manufacturing and supplier ecosystem in Europe and elsewhere to the satisfaction of regulations suspicious of tariff dodging? Until the answer is yes, expect China’s car carriers to offload ever-more sophisticated cars onto the world’s shores.

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How the UK saved the Chinese car industry in 2026

The UK is among the top export markets for the Chinese industry, alongside Russia and Brazil

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How the UK saved the Chinese car industry in 2026

The UK is among the top export markets for the Chinese industry, alongside Russia and Brazil

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