Inside Automotive with Jim Fitzpatrick, powered by CBT News

Michael Dunne on China’s Expanding Grip on Global Auto Markets

• Jim Fitzpatrick • Season 1 • Episode 57

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China’s rapid rise as a global automotive powerhouse is reshaping competitive dynamics worldwide. On this episode of Inside Automotive, Michael Dunne, CEO of Dunne Insights and host of Driving with Dunne, analyzes how the surge in Chinese vehicle exports is impacting automakers, dealers, and suppliers as the industry approaches 2026. Dunne explains how China has gone from a marginal exporter to a dominant force in just five years, outlines where Chinese brands are gaining traction, and assesses which global manufacturers face the greatest pressure. He also explores why affordability and improving quality are driving adoption abroad, how trade policy is responding, and what the next phase of expansion could look like, including potential North American production. The conversation frames China’s ascent as a structural shift that will force established players to adapt faster than ever.

  • China’s unprecedented growth in global vehicle exports
  • Key international markets absorbing Chinese volume
  • Competitive pressure on Japanese, Korean, and U.S. automakers
  • Pricing, quality, and affordability advantages of Chinese brands
  • Automakers to watch, including BYD, Xiaomi, Xpeng, and Leapmotor
  • Implications for dealers and manufacturers heading into 2026

Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

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Jim Fitzpatrick:

Welcome to Inside Automotive with Jim Fitzpatrick. One of the most important stories in the global auto industry for 2025 has been China's accelerating influence on worldwide markets. To help us understand the latest developments and what they mean for automakers, dealers, and suppliers here at home is Michael Dunn, CEO of Dunn Insights and host of the Driving with Dunn podcast. Michael, thank you so much for joining us on the show today.

SPEAKER_00:

They exported maybe a million cars a year. Okay. That shot up. They're currently tracking for seven to eight million this year. So if to go from one million to eight million in five years, something is unusual, unprecedented. We haven't seen that from anyone else. It's more than the Japanese exports, more than the Germans ever exported. This is new territory. So then you start to look at well, where are they going? Because we don't see them here in the United States. And the number one market worldwide is Mexico.

Jim Fitzpatrick:

Wow.

SPEAKER_00:

Right on our southern border. Hundreds of thousands of Chinese cars pouring in there. Other markets I've visited recently, UK, wow. Now 13% of new car sales. Dealers there tell me next year at this time, it could be 30%, a third of new car sales Chinese. Oh my gosh. Australia, Thailand, Middle East, UAE, Israel, everywhere in the world, except here in the United States, where we have our 100% import duties, and Canada, which also has import duties of 100%. So that's incredible. Coming back to your question, what about Mexico? What's going on there? Yeah. Well, the government is a little bit torn. On the one hand, they Mexico exports a huge number of vehicles up into the United States. Okay. It makes a lot of money there. On the other hand, the president feels like its constituents, her constituents, need low-cost vehicles. So they've kept their import duty quite low, 20%. Okay. And the United States has been pushing Mexico. No, you've got to lift it to 100 to be consistent with us in Canada. And just yesterday, the president came out and said, oh, good news, we're going to lift it, but just to 35 percent. And then overnight, I called a couple of Chinese manufacturers. I said, what does that mean for your business, 35 percent? And they said, it doesn't do anything to change our minds. We're gonna go full force into Mexico. Wow. So this is this is a geopolitical, geostrategic issue for the United States and for dealers in the United States, keep an eye on like what's going on. Mexico hot, U.S. zero. So where's it gonna go?

Jim Fitzpatrick:

Now let me ask you, are there and and I know you live, you live in Southern California, right?

SPEAKER_00:

Yes, I live in San Diego, 20 miles from the border here.

Jim Fitzpatrick:

Are you seeing are you seeing Chinese vehicles on the roads in Southern California? I mean, if somebody buys a car in Mexico, what does it look like for them to bring it into the U.S.?

SPEAKER_00:

Tens of thousands of cars cross the border every day. Lots of people live in Tijuana, work here. Yeah. So we are seeing those Baja California Mexican plates on cherries and MGs and BYDs now, like seeping over the border. Yeah. Hey, they're invading. Not huge numbers of them, but they're real, you definitely notice them on the road. Like, what brand is that?

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

So if we fast forward this trend, if there's hundreds of thousands of Chinese cars just across the border, you know, how long are they going to be kept out?

Jim Fitzpatrick:

Of course, of course. What if an American wants to go over to uh the uh or across the border to Mexico and buy a brand new BYD? Does it cost them that do they have to pay any specific tariffs to bring that vehicle or register it into the U.S.?

SPEAKER_00:

You want to buy, you want to lease, walk across the border here, less than a mile away, you'll find a BYD dealership. You can get a brand new BYD shark pickup truck. That's a PHEV. The shark looks a lot like a Ranger or a Tacoma, not by accident. Very high quality vehicle. Yeah. Its price point is around$40,000,$45,000. You can buy it there, bring it back across the border. No one's gonna mess with you.

Jim Fitzpatrick:

Wow. Okay. You're gonna start seeing a lot more of that, aren't you?

SPEAKER_00:

I mean, it it like I say, you don't know. At a certain point, you know, where the money is, follow the money.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

And people say, I can get a much more affordable vehicle out of Mexico and bring it across. Why not?

Jim Fitzpatrick:

That's right. So that's right. Wow. That's very, very interesting. So uh so talk to us about BYD. They are uh they've had sales that are down inside of China for th for uh three straight months. Um but exports have doubled to more than 800,000 this year. Talk to us about that.

SPEAKER_00:

Okay. Inside China, it's a bloodbath. Price wars, no one's making money. BYD's competitors like Gili, SAIC, and Cherry are taking share from BYD. It's very unpleasant inside China if you're making cars and selling cars today. So they look around, they say, we need some oxygen. What do we do? Export. We can make a lot more growth and profits by shipping overseas. Um, profit margins for Chinese automakers are about three or four times what they are at home. Oh my gosh. So when they go when they ship overseas. So we've seen DYD numbers just explode from about 100,000 three years ago, Jim, to more than 800,000 this year. Oh my gosh.

Jim Fitzpatrick:

That that's incredible.

SPEAKER_00:

This this is incredible, and it's kind of making the rest of the world a little bit more than a little bit uneasy, in particular Europe.

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

Going, whoa, there's a tsunami of Chinese cars coming in at 25% lower cost than what we can make. Yeah. Where's our industry going?

Jim Fitzpatrick:

That's right. That's right. So who are they hurting? What brands are they hurting the most? Is it the Japanese imports or or the Japanese uh brands, or what does that look like?

SPEAKER_00:

You nailed it. To my surprise, when I went to the UK recently and then talking to people in Australia, it's the Japanese, in particular, Nissan, of course, taking it on the chin, but also Honda. Toyota holding its own so far, but it's really the Japanese and to a less extent the Koreans under pressure. The Americans would also be suffering too, but the reality, Jim, is that GM Ford and Sciences have largely withdrawn, retreated from most global markets. So it's the Japanese and the Koreans that are getting hurt the most. Oh my God. It's really remarkable. And it's part of a bigger story. You may have seen headlines earlier this week. A Wall Street Journal had a big piece. China this year has a trade surplus with the rest of the world of one trillion dollars. Like they they're exporting one trillion more than they're importing, and that's really upsetting the Apple cart in many countries. Like, hey, Hank, come on, China, you it's got to be a two-way street. Right. So something to watch going into 2026. How will China sort of smooth the waters a little bit because people are getting unhappy with this one-way freight train coming at them and China not buying anything in return?

Jim Fitzpatrick:

Well, and I'm sure they're also looking at President Trump uh President Trump's uh tariff plan and uh and the actions that he's taken against the Chinese to say maybe we need to take a page out of that book.

SPEAKER_00:

That's right. In particular in Europe, it feels like, Jim, Europe is in crisis right now. The the Chinese are shipping hundreds of thousands of cars, taking share in Spain, UK, Italy. They're now building plants there. And you can, it doesn't take too much imagination to say, wow, they're in peril. So it's danger time, and either they're gonna put the brakes on Chinese imports or they're gonna say, Capitulation. All right, we'll we'll hope to partner with the Chinese as they more or less take over uh the markets.

Jim Fitzpatrick:

With that kind of success worldwide, do the Chinese even need the U.S. market?

SPEAKER_00:

What makes the U.S. market so attractive, Jim, is the profits.

Jim Fitzpatrick:

Okay.

SPEAKER_00:

So they're the Chinese are doing well in places like Thailand, Indonesia, the margins are thin. They would love to get into the United States because that's where the money is. And um let's just put it this way if the door were open tonight at midnight by 4 a.m., they'd already be setting up shop. They're poised. They're ready.

Jim Fitzpatrick:

And they're selling these, I would imagine, through a franchise uh system.

SPEAKER_00:

Yes. Yes, uh wherever they go, okay, with tiny exceptions, a company called Vio, but 99% of the sales are happening through a traditional franchise system. That's it. Get their dealers on the ground and ship the cars.

Jim Fitzpatrick:

Right. And if they open up the border at 12 midnight, there would be a line from here back to NADA of dealers that want to become a uh a BYD or a Chinese uh dealership, right?

SPEAKER_00:

Yes, FOMO. Don't miss it. Yes.

Jim Fitzpatrick:

Exactly.

SPEAKER_00:

Yeah, that's now is there is there a is there naturally you think so much success so fast, is there a you know flaw? Yeah, is there something that we're not seeing? Right. And the Chinese pride themselves on speed, they call it China speed. They're able to do things more quickly than anyone else in the world, and that's true. They work really hard, they move so. Sure. But we know in life, when you move that fast, yeah, inevitably there's gonna it's gonna catch up with you. So something else to watch in the months ahead. Are there quality problems that start to surface with the Chinese? So far, so far, so good. Sure, sure. But you don't go, Jim, from like exporting a million to exporting eight million in a year in a few years' time and not encounter some kind of um some kind of problems.

unknown:

Yeah.

Jim Fitzpatrick:

That's right. You remember the movie from the 80s, Gung Ho, where they had Oh yes, yes, yeah. The cars are literally falling apart because the manufacturer here in the US, they just couldn't keep up with it. I think Michael Keaton was the star of that movie. Yes. It was a pretty funny movie, but that comes to mind when you when you talk about something's gotta give here, right?

SPEAKER_00:

Something's gotta give. Yeah. There's nothing conclusion about it. And the Chinese, the other thing is China's murky. It's not transparent. The numbers that they deliver, the information they share, you always have to take with a grain of salt. It's just it's just the nature of the beast. That's how the that economy runs. It's not, there's not a lot of incentive to be totally transparent.

Jim Fitzpatrick:

Right, right. So well, and you know, Jim Ford Ford's Jim Farley uh visited and came back and was like, oh my gosh, the technology and these vehicles and the factories and the way they're running, and this is this is a huge wake-up call for U.S. uh OEMs. And you know, right? I mean, it's it's everybody's shaking their head as to uh you know what's gonna happen next year.

SPEAKER_00:

You you cannot go to China and not be blown away by the scale, the speed, the quality, the designs. It's all true. We the only piece we don't know about yet is long-term reliability. Speaking of Farley, just this week he was in France uh signing a new deal with Renault to produce, hopefully, affordable electric vehicles to compete with the Chinese. And he, to your point, he was quoted as saying, we're in a fight for our lives. Yeah. So it is existential. He sees Europe crumbling. If Europe goes, what where does the US what's left for the what will happen to the U.S.?

Jim Fitzpatrick:

That's right. That's right. There's no question about it. And you wonder at what point in time will the pressure cave um make uh the the you know the the administration cave on some of this where consumers just want their inexpensive uh Chinese vehicles being brought in, right? I mean, because as you know, affordability, fifty thousand dollars average price of a new car here in the U.S. is not it's just not gonna get it. You know, it's just it's just not sustainable, right?

SPEAKER_00:

It's not sustainable. You can go to Mexico and get a city car called the Dolphin for 20,000 bucks. Wow.

Jim Fitzpatrick:

And a nice car.

SPEAKER_00:

Nice car. You can get a SEAL, what they call a BYD SEAL for about 30. So these are there's a reason why they're winning so much market share everywhere else in the world. It's bound to happen here, too.

Jim Fitzpatrick:

So uh the the th the three fastest growing Chinese brands for 2025, I think you might have mentioned them, but go over those once again.

SPEAKER_00:

Yes. So China has 107 brands, Jim. Has dozens and dozens of automakers. Every week I have to check the list, like, oh god, there's a couple of new names. But these are ones to watch. Uh, number one, the fastest growing brand is a company called Xiaomi. You might know that they recently had their car on the Nurberg Green track in Germany and set the world record fastest electric car in the world. Wow. And you go, wait, wait a second. How is that possible?

Jim Fitzpatrick:

Yeah.

SPEAKER_00:

Xiaomi is the number two handset maker, um, smartphone maker in the world, sells$1,500 beautiful hands. We don't have them here in the States, but they're a big powerhouse in China. And think of them like the Apple of China. They're now into cars. So Xiaomi is number one, crazy volume, right out of the box. Beautiful car, looks like a combination of a Porsche and a Tesla. Oh number two. Yeah. Uh X I X I A O M I, Xiaomi. Second one is X Peng, and that's short for the founder's name, H Xiaopeng. Okay. It's kind of like the like Ford of China. Okay. And they have an interesting relationship with VW. Uh they're they're they're working closely with VW to develop products in China for export globally. And then the third one out of the box this year is a surprise called Leap Motor. They're the company that's affiliated with Stellantis. Okay. So in Europe now, as we speak, Stilantis and Leap, and in uh Brazil, they'll begin to jointly manufacture Leap cars for those markets. Wow. So you can kind of see this uh European uh whatever you want to call it, just arrangement with the Chinese and bringing their products back into markets globally outside of China.

Jim Fitzpatrick:

Wow. That's that's gonna be interesting to watch for sure, right?

SPEAKER_00:

It is, it is, it's it's definitely the Chinese, of course, are seeing it as an interim step until they take over. And the Europeans, in this case, Delantis and Volkswagen, are just desperate to get the EV technology. So let's partner up and hope we live happily ever after in eternal bliss. Uh forever marriage.

Jim Fitzpatrick:

That's right. That's right. Yeah. The uh what what is your what is knowing what you know right now, and I mean you're you're pretty well versed on on all of this. And you that I think the the industry turns to you to say, you know, Michael Dunn, what what say you on this? Where where do you think if you had a if you had the Michael Dunn you know uh glass ball there, what does five years out look like for us here in the U.S. with regard to the Chinese?

SPEAKER_00:

Five years out, we will see a couple of Chinese automakers manufacturing in North America. I don't think the dam will hold much longer than that. Okay, and it may be in a joint venture arrangement with GM or Ford so that just like the Chinese asked us to join venture, let's reciprocate and not front. I think it's just inevitable. They have too much, they have low cost, high quality, they move quickly, they have the software. They're tough. They're they're they're the they're out front, and we're the underdog. So the US has to make that adjustment. We used to set the tone. I think now we have to figure out a way to catch up quickly, and part of that might be partnering with the Chinese here.

Jim Fitzpatrick:

Yeah, in the United States. When you look at the Chinese auto, you were just saying these cars are so incredible and for so much less money than than the vehicles here in the US. How does a Chinese manufacturer enter the US manufacturing in a manufacturing capacity with the unions that are out there, with the demands that are made from an EPA standpoint and everything else? Can they still maintain a low-cost, high-quality vehicle and still build them in factories in the U.S.? Or does that does that begin to crumble when they come into the US because of that?

SPEAKER_00:

All right. So great question. It goes right to the heart of the matter. Some days when I wake up, I think what's happening is global automakers outside of China are competing not just with Chinese car makers, but with the government, the nation of China. Sure. So they get all kinds of support. Don't have time to go into it today, but all kinds of support. So they go to the United States and say, what do we need to do to take 20% market share? Do we need to lose money for five years? No problem. 10? Did you say 10? It's on.

Jim Fitzpatrick:

Right.

SPEAKER_00:

So the mindset isn't so much like can they hit that cost point when they move over? First of all, they all tell me they're going to go as far south as possible. Texas, Alabama, they're staying far away from the north.

Jim Fitzpatrick:

Okay.

SPEAKER_00:

Yeah, so that's your unit. They're going to go away from units. Two, they're going to bring as much from China as they possibly can and assemble it in the United States until we get vigilant about that. Okay. But once that scale happens, they would then say, you know what, we're not too concerned about margins for the next 10 years. We want to take market share. Wow. Wow. And that's what gets scary.

Jim Fitzpatrick:

And these are not, maybe they are. I don't, but but are these publicly traded companies? They don't they're not answering to, you know, uh strong bottom lines and stockholder and and and such that that where the board is going, we don't care, you got to make money, you got to make money. It sounds like if the government's involved in this, so like, don't worry about it. Don't worry about the profit right now.

SPEAKER_00:

It's hard for us to conceive of, but BYD's publicly listed, so is X Pung and several others.

Jim Fitzpatrick:

Yeah, that's true.

SPEAKER_00:

But in the in the in the Chinese world, the party presides over everything, including what is this thing, a listed company with shareholders? No, no, that's a that's a toy. We're we're the boss here and we'll shape we'll shape outcomes.

Jim Fitzpatrick:

That's right.

SPEAKER_00:

That's the mindset out of China. And that's something so hard for us in America to come to come to it. Like, what? Yeah, no, the shareholder wants their returns. Of course, everyone wants returns, but there's uh there's this new player into new sheriff in town with new rules.

Jim Fitzpatrick:

That's right. It's really like almost a whole new economy in sorts, you know, with this. A whole new economy.

SPEAKER_00:

It's a whole new economy. That's exactly it. It's they call it state capitalism, where they say, uh, I I think of the economy and the market in China as a subsidiary corporation that belongs to the party. That's right. That's right. Okay, so what what? What is whereas word believers in the market and the consumer define everything? Sure. So how will these two systems work things out? Right, right.

Jim Fitzpatrick:

Um, before I let you leave, let me just get your take on tariffs. Now, in the beginning of the year, when the president came out and said tariff, tariff, tariff, we're, you know, held up the chart, we're gonna, you know, put tariffs on everything. And it really, as you know, we did a lot of shows here, and so did other media companies covering the automotive space. Freaking out dealers, freaking out OEM executives. Oh my god, what's this mean? You know, there goes the industry. Some were forecasting a 12 and 13 million SAR because of it. Looks like we're gonna do an excess of 16 million SAR. So it we I haven't done a lot of shows on tariffs. When I bring it up, dealers and OEM executives go, eh, not that. Not that big a deal. What what is your take as we sit here in the last part of uh 2025 and going into 2026? What is your take on the overall tariff uh idea and concept?

SPEAKER_00:

It looks like a great reset. And what I mean by that is the United States has been an outlier for the last 40 years in that we only had a 2.5% import duty on our on cars coming into the country. Right. And if you look around the world, most other countries are 20, 30, 40, 50 percent. So it's been a free pass for the Japanese, Koreans, and the Europeans coming in here. If it resets to 15 percent, they don't love that, but they're saying, ooh, we still have access to the U.S. market, very profitable. Yeah, we can make adjustments and see our way through. It could have been worse. Right. So that's I think why we're seeing a muted response. They're still very happy to have access to the U.S. market where they make most of their profits. What did Jose Munoz say recently? His three top priorities every day when he wakes up are USA. So, all right, pretty clear.

Jim Fitzpatrick:

Yeah, and he's he's one of the leading auto executives out there, that's for sure. That's right. Yeah, everything that comes out.

SPEAKER_00:

He's a really smart guy. Hyundai's doing great stuff, but just to share that perspective, they don't make much money at home in Korea. Yeah, they're getting hammered in China, just miserable collapse there. Yeah. And then they go to the United States. Ooh, we make nice money even with the tariffs.

Jim Fitzpatrick:

Yeah, and it's a one heck of a franchise for dealers to have. They're making a ton of money on Kia and uh and Hyundai, and you know, that's that's always on a dealer's short list of franchises that they want. Of course, Toyota is usually at the top, Toyota and Lexus, but uh but Hyundai and Kia is right there as well.

SPEAKER_00:

Right there. Yeah. And and uh, Jim, as you know, they're also Hyundai and Toyota continue to pour investments into manufacturing here in the state. So yeah, that's also an offset on the terrace. They're saying, well, we're actually our second home is the United States. This this will be okay.

Jim Fitzpatrick:

That's right. That's right. So everybody just needs to take a deep breath and it'll work out, right? Michael Dunn.

SPEAKER_00:

Enjoy Christmas, enjoy the new year.

Jim Fitzpatrick:

That's right.

SPEAKER_00:

Nothing to worry about.

Jim Fitzpatrick:

That's exactly right. Michael Dunn, the CEO of Dunn Insights, uh, also the host of Driving with Dunn podcast. Check it out. I know you're gonna love it. And uh, just an all-around great guy. And we we thank you so much for an incredible uh year in 2025 of you coming in and sharing your thoughts and ideas and and uh your content with our our viewers. I know they get a lot out of it. I know this because they write me emails and text messages and say, wow, you gotta have that guy on more. He's awesome. So thank you so much. Really appreciate it.

SPEAKER_00:

Jim, always a pleasure. Thank you. Thanks for watching Inside Automotive with Jim Fitzpatrick.