Chinese automakers have overtaken Japanese peers in global sales for the first time in decades.

The companies sold about 27 million new vehicles worldwide last year, up around 10 percent year-on-year, according to a recent news report by Nikkei, citing data from Japanese market research firm MarkLines. In comparison, Japanese automakers saw a slight decline, with total sales falling to some 25 million units.

The development marks the first time since 2000 that Japan's auto industry has lost its position as the world's top seller.

At the company level, Toyota Motor retained its global lead with sales of 11.32 million units, with Chinese automakers making notable gains overall. BYD surpassed Ford to rank sixth globally in 2025, while Geely Auto overtook Honda to place eighth.

Six Chinese automakers — BYD, Geely, Chery, Changan, SAIC Motor and Great Wall Motor — were among the world's top 20 automakers by sales, compared with five from Japan.

Zhang Hong, a senior new energy vehicle industry expert at the China Automobile Dealers Association, said the collective rise of Chinese automakers is reshaping the competitive landscape.

"The fact that the number of Chinese automakers among the global top 20 has exceeded that of Japan marks a shift from the long-standing 'US-Japan rivalry' to a more diversified competition involving China, the US, Europe and South Korea," Zhang said.

In China, the world's largest auto market, total vehicle sales reached 34.4 million units in 2025, data from the China Association of Automobile Manufacturers show. Against this backdrop, major Japanese automakers saw a sharp decline in China. Combined sales of Toyota, Nissan and Honda totaled about 3.08 million units in China, with their market share falling below 9 percent, down from more than 20 percent at their peak.

Among the three, Toyota was the only Japanese brand to post growth in the market, with sales reaching 1.78 million units in 2025, up 0.23 percent year-on-year.

The performance appears to be mainly supported by joint venture operations and adjustments in product mix. At FAW Toyota, annual sales reached 805,518 units, with hybrid models accounting for 47 percent. GAC Toyota sold 772,668 vehicles, with hybrid models exceeding 50 percent of total sales for the first time, both showing a shift in Toyota's China business toward hybrid vehicles.

The situation highlights the fact that Chinese automakers' advantages in new energy and intelligent technologies are accelerating changes in global industry dynamics, Zhang said.

"While European and US automakers have deep expertise in internal combustion engine technologies, they are facing growing pressure to catch up in electrification and intelligent technologies," he said, adding that the global auto industry is increasingly shifting toward new energy and smart connectivity led by Chinese industry players.

Against this backdrop, traditional Japanese brands are stepping up investment. Wang Qian, general manager of NEVs at Dongfeng Nissan, said the company plans to invest 10 billion yuan ($1.45 billion) by the end of 2026 and expand its research and development team to 4,000 people.

"This is not a short-term move, but our most determined investment in electrification and intelligent transformation," Wang said.

Similarly, Suzuki Motor President Toshihiro Suzuki said last year that the entry of BYD's Seagull model into the Japanese market could help accelerate the adoption of mini electric vehicles, adding that Suzuki will steadily advance its own development and launch plans for such models.

Looking ahead, China's auto market is expected to reinforce its new energy push. According to the CAAM, total vehicle sales in China are expected to reach 34.75 million units in 2026, with NEV sales expected to exceed 19 million units, up 15.2 percent year-on-year.