HONG KONG — HONG KONG (AP) — China’s passenger car exports surged 64% in September from the same month in 2025, an industry association reported Monday, as Chinese automakers increasingly focus on exports to drive growth at a time of sluggish domestic sales.

China exported around 919,000 passenger vehicles in September, lifted by overseas demand for plug-in hybrids and pure electric vehicles, data from the China Association of Automobile Manufacturers showed. In the first nine months of 2026, China exported over 7.1 million passenger cars, up more than 70% compared with the same period last year.

Meanwhile, domestic passenger car sales in China have fallen for most of the year as they face weaker consumer confidence at home and scaled back government subsidies. They declined 27% in September year-on-year to over 1.6 million units, according to the association.

China is the world’s largest vehicle exporter, but it is facing increasing skepticism from trade partners who fear it’s undermining their domestic industries and trade balance.

In recent months, Chinese automakers have more aggressively targeted rapid growth in overseas markets such as Europe, Latin America, Southeast Asia and Africa. Canada is also opening its doors to Chinese EV exports under a tariff cut deal with China.

The industry is increasingly relying on overseas markets for sales and profit growth as players seek to offset the weakness in the domestic market, said analyst Stephen Chan with S&P Global Ratings.

Consultancy AlixPartners and some auto analysts have expected Chinese automakers to export nearly or around 10 million vehicles globally in 2026.

In Europe, Chinese automakers are increasingly challenging the European auto industry with cheaper costs and prices. AlixPartners’ analysis found, for example, that a Chinese-branded EV costs around $20,000 to produce, compared with $31,000 for a European equivalent.

The EU has already imposed higher tariffs on Chinese electric vehicles. Recent policy discussions have also focused on rapidly rising sales of Chinese hybrids in Europe.

Amid growing pressure on the EU to rebalance trade with China, EU trade chief Maroš Šefčovič said Friday that the two sides had reached an interim deal that could halve Chinese hybrid vehicle exports to the bloc.

The agreement sets an annual import quota of 350,000 electric or hybrid vehicles made in China, two senior EU officials said Monday. The officials spoke on condition of anonymity under European Commission policy.

Starting as early as December, customs authorities across the 27-nation bloc will coordinate monitoring of these imports and halt further shipments once the annual quota is reached, one official said. The limit excludes cars made in Europe by Chinese companies.

Analysts said protectionist measures would likely continue to cloud Chinese automakers’ overseas outlook.

“You can’t expect BYD or the other OEMs (manufacturers) to export too many cars without facing tariffs or pushbacks from the foreign governments,” Xiao Feng, head of Hong Kong and China industrials research at investment group CITIC CLSA, told reporters recently.

Geopolitics is the biggest challenge to BYD’s overseas expansion, executive vice president Stella Li, who leads the Chinese EV giant’s global growth, acknowledged at an event this month.

BYD has therefore been expanding overseas production, including setting up plants in Thailand, Indonesia, Brazil and Hungary, she told the Milken Institute Asia Summit in Singapore.

Chinese automakers will likely continue to expand overseas production to reduce exposure to tariffs and other risks, said Ming Lee, head of Greater China automotive and industrial research at BofA Global Research, a unit of Bank of America.

“More and more volume will be made locally,” he said.

The U.S., meanwhile, has effectively shut Chinese EVs out of its market with hefty tariffs. President Donald Trump’s meeting with Chinese leader Xi Jinping during Xi’s state visit to Washington last month yielded no deal on access for Chinese EVs.

Experts say continued political uncertainty likely makes the U.S. market a lower priority for Chinese automakers.

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McNeil reported from Brussels.