UOB predicts 20% explosion in China’s 2026 vehicle exports

EV exports are forecast to grow 40% despite weak early-year sales.

China’s vehicle exports are forecast to increase 20% year on year (YoY) to 6.6 million units in 2026, providing the main source of growth after a weak start to the year, according to UOB Kay Hian.

The brokerage said total passenger vehicle sales are expected to reach 30.4 million units in 2026, representing 3% growth, even as domestic sales are projected to decline 2% to 23.9 million units following subdued retail performance in early January.

Export growth is expected to be led by electric vehicles. UOB Kay Hian forecast EV exports of 3.1 million units in 2026, up 40% YoY, as Chinese manufacturers continue to expand sales into overseas markets.

Total passenger EV sales are projected to rise 19% YoY to 18.2 million units, lifting EV penetration to about 60% of total passenger vehicle sales, the brokerage said.

UOB Kay Hian noted that early 2026 sales were weak, with passenger vehicle retail sales falling sharply in the first half of January, reflecting seasonality ahead of the Lunar New Year and softer consumer sentiment.

The brokerage said export momentum is expected to benefit from new model launches overseas, the ramp-up of overseas assembly operations, and clearer trade conditions in key markets.

In Europe, UOB Kay Hian said there are no current plans to impose tariffs on Chinese hybrid vehicles, whilst battery electric vehicles are subject to a price-undertaking mechanism that could replace additional tariffs of up to 35.3%.

The brokerage added that hybrid vehicles remain outside the scope of existing EU trade actions, reducing near-term regulatory risk for exporters.

UOB Kay Hian maintained its market-weight stance on the sector, citing continued pricing pressure and competition in the domestic market despite export growth prospects.

Overall, the brokerage expects exports and EV penetration to offset weaker domestic demand and support China’s passenger vehicle volumes in 2026.