Foreign Carmakers Face China Exit As Sales Collapse

A number of underperforming international car brands are likely to either exit the mainland Chinese market or scale down operations, as losses mount due to falling sales and shrinking market share.

Carmakers delivering fewer than 1,000 units a month already faced a do-or-die situation in the world’s largest automotive market because the weak sales were not enough to cover their manufacturing and operating costs, according to analysts.

Some carmakers are likely to follow Skoda, Volkswagen’s mass-market brand, which shut down its Chinese operations this year, as cutthroat competition along with a contracting market ratchets up pressure on unprofitable marques.

“Skoda will not be the last foreign auto brand to withdraw from China in 2026,” said Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service. “Keen competition in this market will result in further consolidation of the automotive industry in the coming three to five years.”

Last month, Volkswagen said it planned to close down Skoda’s operations in China after sales plunged 95 per cent between 2019 and 2025.

 The Czech brand sold 15,241 units last year, or 1,270 units a month.

Stephen Dyer, Greater China co-leader and head of Asia automotive practice at AlixPartners, said last year that car brands selling fewer than 1,000 units a month were likely to be edged out soon.

Currently, at least four international brandsDS, Jeep, Infiniti and Peugeot sell about 1,000 units a month, according to the companies’ data.

Others, such as Chevrolet and Kia, are also stuck in a downward spiral in a market where electric vehicles (EVs) are outselling conventional petrol-powered cars. Foreign marques have been eclipsed by their Chinese rivals because of their slow transition to electric cars.

On the mainland, EVs accounted for 54 per cent of total new car sales in 2025, according to data from the China Passenger Car Association (CPCA).

International carmakers held a 34.7 per cent share of the mainland’s car market, compared with 52.7 per cent in 2022, CPCA data showed.

German carmakers including Volkswagen and BMW accounted for 15.4 per cent of China’s passenger car market last year, compared with 21 per cent in 2022.

US carmakers like General Motors and Ford commanded a 5.5 per cent share last year, compared with 8.5 per cent three years earlier.

Japanese carmakers from Toyota to Honda saw their market share slump to 12.2 per cent last year from 20 per cent in 2022.

In 2025, Tesla was the only international brand that made it onto the list of the top 10 EV builders in China.

“Foreign brands are no longer our first choice because they are now the laggards in developing electric cars, particularly smart electric cars,” said Lin Junxin, a 55-year-old consumer who plans to replace his Buick Regal sedan with an Onvo L60 smart EV from Shanghai-based Nio.

“Onvo is a spacious SUV with many intelligent features. More importantly, an electric car will save me hundreds of yuan in fuel costs every month.”

At the end of 2024, UBS said foreign carmakers were at risk of losing up to US$20 billion in profit annually in China amid a rapid market shift towards electric cars and smart vehicles.

Falling demand for foreign brands would lead to excess production capacity of about 10 million vehicles in China, the Swiss bank added.

This year, some foreign carmakers are likely to test the market’s appetite for their EVs designed especially for Chinese consumers, as they accelerate their transition to electric cars, according to industry officials and analysts.

Last year, Toyota, Nissan, Mercedes-Benz and BMW launched new EV models featuring preliminary self-driving systems and sophisticated digital cockpits, aiming to regain lost ground.

These carmakers have relied on China’s EV supply chain and technology to design and build the cars, hoping to lure mainland consumers away from local brands such as BYD and Geely.

Some of those models have been successful. Since its debut in April last year, Nissan’s N7 sedan, which is equipped with a preliminary autonomous driving system, has sold 45,382 units up to December.