China Set To Become World’s Top Auto Exporter Replacing Japan By 2023 End: Moody’s Analytics

The report states China is now narrowing the gap from Japan, with the average shortfall at 70,000 cars per month in the June quarter, compared to 171,000 cars for the same period a year earlier. 

China is on the way to replace Japan to be the top automobile exporter in the world by the end of this year, a report by Moody’s Analytics has claimed. The report by the credit ratings agency has predicted that China will overtake Japan and become the world’s top auto exporter by 2023 end. 

As reported by CNBC, the report, released last week, noted that China is now narrowing the gap from Japan, with the average shortfall at 70,000 cars per month in the June quarter, compared to 171,000 cars for the same period a year earlier. 

The report said, “China made heads turn through the pandemic as it strutted past South Korea in 2021 and Germany in 2022, making it the second-largest car exporter.” The economists at Moody’s estimated Japan will lose the top spot, which it has claimed since 2019, and said, “At this pace, China is on track to overtake Japan by the end of the year.”

The report states that strong demand for electric vehicles has contributed to this growth in China’s auto exports to levels even ahead of the pre-pandemic era. The first half of 2023 saw China’s EV export receipts doubling, on a year-on-year (YoY) basis. While, auto exports, including traditional and electric vehicles, from Japan and Thailand, struggled to return to their pre-pandemic levels. Further, the whole Asia-Pacific region has witnessed an average recovery in auto exports.

A major factor helping the Chinese auto export industry is the advantage China possesses in lithium-ion battery cell production, which in turn helps with the production costs related to an EV, the report noted. 

Moody’s projections state that China produces the majority of the world’s lithium supply, complemented by the availability of cheaper labour in comparison to Japan and South Korea. Even in terms of the refining capacity of the metal, China holds more than half of the world’s capacity. As such, many major auto companies like Tesla, BMW, and more have set up their production facilities in China. Further, the report states that local brands like Chery and SAIC have not been overshadowed by foreign ones. 

Moody’s analysts commented, “Indeed, the speed at which China has embraced new technologies in the automobile industry is unparalleled.” EV car sales increased to more than 10 million in 2022 and China contributed to 60 per cent of these, based on the data released by the International Energy Agency in April, the report noted. 

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