Global Automotive Giants Flock to Emulate China: Are They Sure They Can?

The global automotive industry is experiencing a massive shift in power dynamics. Once dominated by Europe and Japan in terms of innovation and production, China is now taking over that role, particularly in the era of electric vehicles (EVs) and automotive software.

Western and Japanese manufacturers such as Volkswagen, Mercedes-Benz, and Toyota now stand at a crossroads between chasing to catch up on their lag or maintaining independence, each with its own risks.

In this situation, the Western automotive industry finds itself in an awkward position.

China Takes the Stage, the West Begins to Lag Behind

China is now not only the world’s largest car market but has also become the biggest car exporter, surpassing Japan since 2023.

Schmidt Automotive Research, a German consultancy firm, notes that China’s car exports have exceeded 8 million units in 2025. Along with increasing market penetration in Europe and developing countries like Indonesia and Brazil, Chinese manufacturers are becoming increasingly aggressive in global expansion.

In contrast, the market share of foreign manufacturers in China continues to shrink, now standing at around 30%. This means Western companies are not only losing in the global market but also in the world’s largest market.

Major Dilemma: Dependency, Loss of Identity, to Strengthening Competitors

To catch up on their lag, Western and Japanese car manufacturers are beginning to overhaul their strategies aggressively. They are shifting innovation centres to China and forging partnerships with local companies.

However, this strategy raises serious dilemmas. Without collaboration, they risk falling further behind. Yet, dependency on Chinese technology and ecosystem could erode control and brand identity. Another significant risk is strengthening their own competitors.

With high risks and limited choices, if the Western and Japanese automotive industries make the wrong move, instead of catching up, they could end up becoming dependent on the competitor they fear the most—China.