Brazil has emerged as a flashpoint in the China auto industry's torrid global expansion. A growing surplus of new cars being pumped out of Chinese factories has led to an export boom over the past five years, helping China pass Japan in 2023 to become the world’s top vehicle exporter. Much of this excess is being shipped overseas, to markets like Europe, Southeast Asia and Latin America.

Brazil offers an enticing destination due to its large market - it is the sixth-largest car market by volume - where established players including Volkswagen, General Motors and Stellantis have been building cars domestically for decades. The Brazilian government has set policies aimed at growing sales of electric and plug-in hybrid cars, BYD’s specialty.

Meanwhile, BYD’s path for growth elsewhere has narrowed, both domestically and overseas. At home, the company is mired in a bruising price war that has seen it slash the price of its entry-level Seagull to below $10,000, squeezing profit margins.

Abroad, governments have erected stiff trade barriers for Chinese cars, including a 45.3% duty in Europe and a tariff of more than 100% in the United States, along with a ban on Chinese software in cars.

For years, Brazilian officials have taken steps to protect the market from unfettered access by Chinese car companies. But it has been slower to react and less aggressive than other nations.

Source: Link