China’s passenger-vehicle market contracted sharply in June, with domestic sales falling 23% year on year to 1.6 million units, according to the China Passenger Car Association. The decline was broad-based, hitting both combustion-engine and new-energy vehicles (NEVs); battery-electric and plug-in hybrid sales slipped 7% from a year earlier to 1.04 million units, and first-half NEV deliveries were down 13%. The slump marks a decisive shift in the world’s largest auto market, where weakening consumer confidence, a property crisis and the gradual withdrawal of purchase incentives are cooling demand that manufacturers had banked on.

At the same time, Chinese automakers shipped 877,000 vehicles abroad in June, an 82% increase year on year, with NEV exports alone rising more than 150%. Viewed from Beijing, the export push is a direct response to overcapacity and thinning margins at home. Rising chip costs, lithium-carbonate speculation and a multi-year price war have squeezed profits, leaving only a handful of firms—BYD, Xiaomi and Leapmotor among them—in the black. Industry analysts in China now expect a wave of consolidation, with weaker brands facing bankruptcy or acquisition, while survivors redirect output to foreign markets. The CPCA forecasts that full-year exports could reach 10 million units, up 41% from 2025.

In North America, the picture is inverted. Mexican auto exports fell 9.2% in June to 301,000 light vehicles, the steepest monthly drop of 2026, as production lines adjusted to a 25% US tariff on vehicles not meeting regional content rules. Mercedes-Benz, Audi and Nissan recorded the deepest declines. Mexican officials, including Economy Secretary Marcelo Ebrard, have flagged the tariff and rules-of-origin requirements—currently 75% regional content—as central points in the T-MEC review, arguing that Asian and European competitors face only 15% duties with no such content mandates. Despite the June contraction, first-half exports from Mexico still edged up 1.4%, with the US absorbing 75.9% of shipments.

Global competitive dynamics are shifting rapidly. BYD has regained the title of world’s largest battery-electric vehicle maker, surpassing Tesla on the back of surging overseas deliveries, even as its domestic volumes dipped 8.2%. In Indonesia, BYD rebounded to become the top-selling Chinese brand in June with 5,264 units, contributing to a market that grew 32.9% year on year. In Switzerland, Chinese marques such as BYD and Zeekr are gaining ground, with BYD selling 790 cars in June, nearly matching Renault. The next milestone to watch is the implementation of China’s revised tax incentives from July, which the CPCA expects could gradually improve market sentiment, alongside the ongoing T-MEC negotiations that will determine the cost structure for Mexican-made vehicles entering the US.