What happened in China this month? July 2026

Keeping track of the Chinese automotive industry over the past six months has kept me busy. Fortunately, July has given us a chance to reflect on the year so far. In July, manufacturers posted their Q2 2026 delivery and sales data, allowing us to see a more complete picture of the performance of Chinese automakers in 2026.

So far, BYD has dominated in scale, but Leapmotor has delivered impressive growth and a 95% increase compared to the same period in 2025. Both companies’ overseas sales are also growing.

The strategic question is no longer whether Chinese OEMs can compete globally. They are building market share with sales techniques, feature led product positioning and sensitive pricing. The question is how effectively they can translate domestic success into sustainable overseas market growth.

In this edition of the monthly China insight, off the back of recently published Q2 sales data, we will look at how distributor relationships in Europe have become competitive differentiators and potentially a key driver of overseas success.

What is the industry assuming?

The consensus is that Chinese automakers’ success is driven by their competitive balance of product, price and technology.

Competitive pressures in the domestic market are leading to automakers wanting faster development cycles. Manufacturers are choosing to accelerate development cycles, bringing new technologies to market faster than many global competitors. As a result, Chinese automakers are often able to bring more advanced technology to overseas markets more quickly than overseas competitors.

In China, competition is not solely driving costs down. It’s not a race to the bottom. Competition is also centred on feature innovation. Will feature-rich, more expensive EVs sell in the EU as well?

In overseas markets, our view is that distribution networks may be an equally important variable. Ultimately, retail and distributor networks convert product competitiveness into commercial scale. While product, price and technology remain critical, distribution appears to be an underappreciated factor in overseas success.

Is distribution and retail success in Europe driving global growth of Chinese automakers?

Not yet, but it is important for future growth. Europe is currently a strategic investment rather than a volume driver.

Chinese automakers’ global growth is still driven by domestic demand – as shown in Graph 1. Graph 1 shows cumulative sales for each automaker in 2026. BYD has grown global sales from around 180k monthly sales in January 2026 to about 340k monthly sales in June. For comparison, BYD reached a total of 170,000 cumulative overseas sales by the end of June.

That is expected though. BYD operates at a scale comparable to other global automaker groups.

Leapmotor is potentially more interesting because of the rate of growth. Their Q2 update shows around 93k global sales in June 2026, compared to 30k in February 2026. Leapmotor achieved approximately 80k cumulative overseas sales by June, representing almost a quarter of the global total.

NIO’s global sales are shown but they don’t disclose overseas data on a regular basis. While NIO Group delivered 80k vehicles globally during Q1 2026 and 107k during Q2 2026, European registrations remained limited, particularly in Germany.

NIO's global growth in 2026 has been driven primarily by China and by the new ONVO and Firefly brands. In contrast, Europe remains a small contributor to overall volume. This has coincided with a strategic shift by NIO to move from direct sales toward distributor partnerships across certain European markets.

Figure 1: Cumulative sales data for Chinese automakers. Source: Automaker July sales updates.

Does partnering with a distributor in Europe accelerate overseas growth?

Yes. The available evidence suggests a relationship between distributor-led expansion models and faster retail network growth in Europe. While distributor partnerships are not the sole driver of success, they appear to reduce the time required to establish meaningful market coverage.

BYD and Leapmotor are simultaneously expanding sales volumes and building European retail networks. In contrast, NIO's smaller sales base and attempt to build retail infrastructure independently suggest that constrained distribution may have restricted their ability to scale.

The companies investing most aggressively in European distribution, like BYD and Leapmotor, are also the companies demonstrating the strongest overseas volume growth trajectories. Leapmotor's Stellantis-backed expansion demonstrates how access to an established sales and service ecosystem can dramatically reduce the time required to build a meaningful European retail footprint.

BYD has evolved from a distributor-led expansion strategy into a hybrid model that combines distributors with direct national operations in strategically important markets. NIO's direct-sales strategy has produced the smallest retail footprint and is now evolving toward a distributor model. All of NIO’s entries into a new market over the past year have been through local partners.

Table 1: Distributor-led brands have achieved greater retail scale. All data points are best estimates. An accurate figure for Leapmotor’s retail network in Germany could not be determined but is based on Stellantis network

* not including recent distributor announcements

Brand	Market Entry Model	Germany	France	Italy	UK	Europe total retail locations
Leapmotor	Stellantis distributor network	Stellantis network	130	120	46	> 800
BYD	Hybrid. Direct and distributor partnerships	> 200	90	97	125	> 800
XPENG	Hybrid Direct and Distributor model	~70	> 70		47	> 200
NIO	Transitioning to hybrid. Direct and distributor partnerships	Small retail network	Not present	Not present	Launch pending	< 20*

BYD and Leapmotor have established retail footprints of over 800 locations each, while NIO's direct sales strategy remains concentrated in a small number of flagship locations. This suggests that access to incumbent distributor infrastructure may be a more important determinant of market penetration than brand maturity or technology availability.

What to look out for next?

Central and Eastern Europe.

Western Europe's largest markets, such as Germany, France and UK, are increasingly mature from a retail standpoint. Most major Chinese automakers already have representation there.

The next move appears to be countries where retail networks are still being built.

Table 2: Distributor coverage and representation. Table 2 shows examples from the past 12 months.

Distributor	Represents	Markets Covered
Emil Frey Group	Leapmotor	Hungary and Czechia
AW Distribution	NIO and Firefly	Poland, Romania, Hungary, Czechia
Hedin Mobility Group	XPENG	Belgium and Luxembourg

In truth, the most notable observation from Table 2 is the concentration around a small number of distributor groups.

Emil Frey Group and AW Distribution are appearing as preferred launch partners for Chinese automakers entering Central Europe. The next phase of European expansion could depend on securing relationships with the distributor groups that already control local retail infrastructure and customer access.

If you’re looking to keep track of the other new products and announcements in China’s automotive market, including other OTA updates and chipset and software developments, SBD’s China Innovation Tracker provides a quarterly view of the most innovative technologies and features entering the market, both in China and from Chinese companies globally.

Mike’s insight:

I’ll be back next month with the next “What happened in China?” update.

"Looking at the first half of 2026, I'm increasingly convinced that the Chinese automotive industry's biggest challenge overseas is not new technology development. Chinese automakers and suppliers have demonstrated they can build competitive products.

For those benchmarking against Chinese competitors, both domestic and overseas, I recommend you do so through a filter of most innovative technology and most effective route to market. That will show you what to focus on."

Mike Levet - Senior Analytical Reports Specialist at SBD Automotive

If you or your team would like access to the Auto China 2026 Premium Report or to understand how the highlighted technologies, partnerships and market dynamics could impact your strategy, we invite you to get in touch. Email info@sbdautomotive.com to connect with one of our experts and discuss your specific requirements.

Summary of activity in 2026 so far: