Gasgoo Munich-Citing data from the China Passenger Car Association (CPCA), Secretary-General Cui Dongshu reported that China imported 100,000 vehicles from January to March, a modest 3% increase year-over-year. Specifically, March imports fell to 28,000 units, down 12.6% month-over-month and 28.9% year-over-year, with an import value of $1.17 billion—slipping 20.7% from February and 39.6% from a year earlier. In stark contrast, exports surged during the same period, reaching 2.34 million units in the first quarter, up 53% annually. March alone accounted for 790,000 exported units, a 39% jump.
Looking at March alone, the gap between inflows and outflows is stark: China’s vehicle exports are now more than 27 times higher than imports. This contrast underscores a structural reshaping of the auto market, where a persistent divergence—shrinking imports running parallel to surging exports—has evolved from a short-term cycle into a long-term trend.
The "Volume Up, Price Down" Reality of Imports
Notably, March’s near-30% plunge in import volume was recorded against a low base from the same period in 2025, suggesting the actual contraction is even steeper than the headline figures imply.
Cui emphasized that "with the rise of domestic vehicles and the accelerated localization of international brands, auto imports have remained sluggish in recent years." Imports have seen negative growth for three consecutive years; when smoothing out volatility, the decline extends to eight straight years.
From a historical perspective, China’s auto imports have withered significantly from their 2014 peak of 1.43 million units. Full-year imports dropped to 700,000 units in 2024, down 12%, and fell further to 480,000 units in 2025, a 32% decline. The downward trajectory is unmistakable.
Beyond the raw numbers, structural shifts in the import market demand attention. Mirroring the drop in volume, the average import price per vehicle is also trending downward. The 39.6% year-over-year drop in import value for March outpaced the decline in volume, indicating that the average price bracket for imported models is shifting lower. This "volume-up, price-down" dynamic signals a shift in consumption logic: high-premium imports with heavy brand markups are increasingly being displaced by more rationally priced alternatives.
According to data released by Cui, the top ten sources for March 2026 imports were Japan with 18,154 units, followed by Germany with 3,929, Slovakia with 1,290, the U.S. with 1,226, the UK with 978, Mexico with 774, Thailand with 542, Austria with 344, South Korea with 86, and Italy with 55. Japan dominated the list, with first-quarter imports totaling 52,382 units—an increase of 21,869 units year-over-year.
Image Source: Lexus China
Brand performance offers another insight. Against a backdrop of sharp declines for mainstream luxury players like BMW, Mercedes-Benz, Porsche, and Audi, Lexus managed to hold steady. In 2025, as the overall import market shrank by 32%, Lexus sales reached 184,000 units, up 2% year-over-year. It remains the only import luxury brand to achieve positive growth, securely holding the top spot.
Standing in stark contrast to the shrinking import market is the relentless rise of domestic brands’ market share.
Data from the China Association of Automobile Manufacturers (CAAM) shows Chinese-brand passenger car sales reached 1.632 million units in March, up 0.2% year-over-year, capturing a 67.7% market share—an increase of 1.7 percentage points from last year. Meanwhile, the export market remains strong, with March vehicle exports hitting 780,000 units, a 30.8% annual jump.
As domestic vehicles catch up—and often surpass—imports in quality, intelligence, and service experience, the "status symbol" logic that long buoyed imported cars is eroding. Consumer decision-making criteria are shifting from "where it was built" to "how well it works."
Consumer priorities in China have diverged significantly from markets like Europe, according to an executive at NIO. "German users prioritize reliability, accessibility of after-sales service, and cost of ownership," the executive noted. "In China, consumers care first about intelligence, autonomous driving, and connectivity features." This divergence highlights how China’s preference for intelligent experiences is gradually reshaping the competitive center of gravity in the auto industry.
From "Cost-Effective Substitutes" to "Technological Peers"
The contraction of the import market is no isolated incident; it is a direct reflection of the massive leap in domestic competitiveness. Entering 2026, domestic brands have not only established absolute dominance in the mid-to-low-end market but are becoming a strong competitor in the high-end sector—previously the stronghold of imports and joint ventures. Brands like Li Auto, NIO, AITO, and ZEEKR are making simultaneous pushes, using differentiated product positioning to challenge traditional luxury players across various price bands.
Image Source: Huaban
On April 21, Tao Qing, a spokesperson for the Ministry of Industry and Information Technology (MIIT), revealed that sales of domestic-brand passenger vehicles priced above 500,000 CNY surged 97% year-over-year, capturing a 69.5% market share. Vice Minister Zhang Yunming noted the "continuous increase in high-end products" during the first quarter, citing this data as a landmark achievement. The displacement effect of domestic vehicles in the high-value "blue ocean" market is accelerating.
Market data for the first quarter of 2026 shows domestic models sweeping the top eleven spots in the large SUV sales ranking. Foreign brands like the Mercedes-Benz GLS, BMW X7, and Lexus LX barely made the list, trailing significantly in volume. The NIO ES8 led the pack with 47,000 units, followed closely by the ZEEKR 9X, AITO M8, M9, and Li Auto L9. Consumer acceptance of domestic high-end products is shifting from "outliers" to the "norm."
More importantly, the rise of domestic high-end vehicles is driven not by being "cheaper," but by being "better." From intelligent cockpits and city-navigation assisted driving to 800V high-voltage platforms, domestic models have surpassed their import counterparts in key technological dimensions at similar price points.
This generational gap—akin to the leap from feature phones to smartphones—has rewritten the framework for how consumers perceive value in luxury vehicles. Industry analysts point out that consumers now prioritize the actual experience of product performance, meaning the "domestic substitution" trend is evolving from price-driven to value-driven.
The sustained contraction of the import market has triggered strategic adjustments among multinational automakers, accelerating their localization efforts in China. Cui identified the core reason for the import decline as "the rise of domestic cars and the accelerated localization of international brands." The direction of localization has shifted fundamentally from the "global car, local tweaks" approach of a decade ago—global giants are now accelerating the relocation of their R&D centers to China.
Volkswagen serves as a prime example of this transition. The company established its first global R&D, innovation, and component procurement center for new energy vehicles outside of Germany in Hefei, Anhui. With a cumulative investment of 3.5 billion euros over five years and a team of over 3,000 R&D experts, Volkswagen also inaugurated its first full-process R&D and testing center outside its German headquarters in Hefei, covering everything from platform architecture and battery systems to software integration and vehicle validation.
Image Source: BMW China
Strategic moves by the "BBA" trio (BMW, Mercedes-Benz, Audi) also send clear signals. Approximately 70% of the source code for BMW’s next-generation operating system was developed and optimized by its Chinese team. BMW collaborated with local partners to develop a customized AI engine powered by DeepSeek, while integrating Amap and Huawei HarmonyOS digital key functions to ensure seamless connectivity with the local digital ecosystem. The long-wheelbase version of the next-generation BMW iX3 made its debut at the Beijing International Auto Show in April 2026 and is scheduled for launch in the fourth quarter of this year.
Audi has partnered deeply with Huawei on its Qiankun intelligent driving system, while Mercedes-Benz’s China team is leading the development of intelligent systems. The shift of R&D focus for multinationals in China is an irreversible trend.
Against this backdrop, the traditional boundary between joint ventures and local brands is increasingly blurring. China is gradually becoming the birthplace of next-generation automotive technology, not just its largest consumer market and production base.
Imports Retreat to the Fringes
Looking ahead, the critical questions remain: Will the import market continue to contract? And can the rapid growth of exports be sustained?
Cui offered a clear verdict: the import market will persist in the long run but will enter a "micro" phase, focusing on niche segments like ultra-luxury and enthusiast vehicles. "It will continue to shrink over the next three to five years, with the rate of decline slowing, eventually settling at the 200,000-unit level, or 1% to 2% market share," he stated.
In contrast to the import market, the momentum on the export side remains robust. The performance of new energy vehicles (NEVs) is particularly notable: CAAM data shows NEV exports reached 371,000 units in March 2026, up 2.3 times year-over-year, with cumulative first-quarter exports hitting 954,000 units, a 2.2-fold increase. The China EV 100 projects that total exports for 2026 could surpass 8 million units, with NEVs accounting for 3.5 million.
Furthermore, export destinations are diversifying. Data for the first quarter of 2026 shows Russia leading as a destination for Chinese passenger vehicles with approximately 187,000 units, up 97.1%; Brazil followed with 167,000 units, surging 242.8%; and the UK ranked third with 109,000 units, up 115.7%. The UAE, Belgium, and Italy also saw significant volumes, with Europe and the Middle East contributing major gains. This dual support from emerging and developed European markets helps mitigate the risks posed by policy shifts in any single region.
Of course, the challenges facing exports cannot be ignored. The EU has imposed countervailing duties on Chinese EVs, high tariff barriers remain in the U.S., and geopolitical factors like Red Sea shipping disruptions have driven up logistics costs.
Image Source: BYD Auto
As export volumes continue to climb, Chinese automakers’ strategic focus is upgrading from simple "product exports" to "full industry chain globalization." For instance, BYD has raised its 2026 export target from 1.3 million to 1.5 million units and is building local production facilities in Thailand, Brazil, and Hungary. Chery is constructing plants in Brazil and Indonesia, with plans for a Spanish production base.
The globalization of Chinese autos is evolving from "selling to the world" to "taking root in the world." From a long-term perspective, the structural advantages brought by this transformation may hold even greater potential than the export volumes themselves.
However, at this stage, there is still a long way to go before Chinese automakers can truly "integrate" into these markets.
An executive at a Chinese supply chain firm’s European branch noted that while many companies have made significant localization efforts, European clients often remain distant. The reason, he explained, is that these investments are often superficial rather than addressing what the local market truly values. "True localization isn’t about having an office in Germany; it’s about your engineering capability, decision-making power, and deep customer relationship management," he added.
Conclusion:
From a broader perspective, this shift in the "in-and-out" dynamic reflects the transformation sweeping through China’s auto industry: it is moving from being a consumption market where "global cars are sold to China" to a manufacturing and export powerhouse where "Chinese cars run globally." This is not a short-term cyclical fluctuation, but a structural reshaping driven by technological leadership, supply chain maturity, and a generational shift in consumer attitudes.
As the smart electric era returns the power of definition to local enterprises, the retreat of imports and the global rise of Chinese cars have become long-term trends. For the industry, the real test has shifted from "can we build good cars?" to "how can we establish sustainable rule-making power in global competition?"
