BYD led China’s passenger vehicle market in sales for the first time in 2024, highlighting the rise of privately owned companies in an industry long dominated by partnerships between state-owned and foreign automakers.

BYD’s sales jumped 46% on the year to about 3.65 million vehicles, according to data compiled by MarkLines by corporate group. Sales at Zhejiang Geely Holding Group, another private automaker, grew 30% to rank third at 2.01 million vehicles.

Foreign automakers lost ground across the board. Volkswagen, which led the market for decades and once sold more than 4 million vehicles a year in China as a group, slipped to second place after sales sank 6% to 2.98 million. General Motors saw a 10% drop. Toyota Motor and Honda Motor also logged declines.

The Chinese government have, since the late 1980s, sought to foster its automotive industry through joint ventures between a few state-owned enterprises and foreign automakers that could supply them with technology. Volkswagen, GM, Toyota, and others grew their market share through tie-ups with the original “big three” of China FAW Group, SAIC Motor, and Dongfeng Motor.

More recently, technological innovation has allowed private automakers to take the lead.

As the government encouraged broader adoption of electric vehicles and plug-in hybrids, the likes of BYD and Geely prioritized these new energy vehicles. The industry has recently also seen such technology-sector entrants as Huawei Technologies and Xiaomi.

Sales of new energy vehicles, including exports, grew 36% to 12.86 million units in 2024, making up 41% of overall new automotive sales, data from the China Association of Automobile Manufacturers shows. Foreign and big state-owned companies that have arrived late to the game have become less competitive as a result.

GM last quarter booked USD 4 billion in charges related to restructuring Chinese joint ventures with SAIC Motor. Japanese automakers have been cutting staff and production capacity in the country.

State-owned Dongfeng and Chang’an Automobile said on February 9 that their parent companies each plan to merge with an unnamed “central state-owned enterprise,” spurring speculation that the two will combine with each other. This could affect Honda and Nissan Motor, which have joint ventures with Dongfeng.

The ascent of private Chinese automakers has also begun to affect the global market, as BYD, Geely, and others leverage the cost-competitiveness they have honed in the world’s largest auto market to make inroads abroad.

BYD’s global sales grew 41% to 4.27 million vehicles in 2024, surpassing Honda, Nissan, and Suzuki Motor for the first time. Although only about 10% were sold outside China, the company is gaining ground in Southeast Asia and Latin America.

Geely and its group brands logged record global sales of 3.33 million vehicles and aims to reach 5 million in 2027. Its Zeekr luxury EV line is available in over 40 markets.

The fierce competition among China’s automakers in such areas as EVs, autonomous driving technology, and software-defined vehicles could make the country a main driver of innovation in the industry. The merger talks between Honda and Nissan came about partly as a way to compete with Chinese rivals.

The US and the European Union, worried about China’s growing car exports, have responded with tariffs. Chinese automakers, in turn, are moving to build cars in Europe to avoid duties there, and US President Donald Trump has made comments suggesting an openness to Chinese production on US soil.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.