- Japan's customs data show the country exported 5.97 million vehicles last year, surpassing the 5.22 million vehicle exports reported by China's customs data.

- The Ministry of Commerce expects the share of gasoline vehicles in China's auto exports to exceed 70 percent in 2023, with exports of new energy vehicles growing rapidly.

- Sarah Tan, an economist at Moody's Analytics, said many gasoline-powered cars are sold to Russia.

China has failed to replace Japan as the world's biggest car exporter by 2023, although it is close to doing so, data show.

Japan's customs data showed the country exported 5.97 million vehicles last year, surpassing the 5.22 million vehicle exports reported by China's customs data.

The Ministry of Commerce expects China's auto exports to account for more than 70 percent of gasoline vehicles in 2023, with exports of new energy vehicles growing rapidly.

Moody's Analytics (Moody's Analytics) economist Sarah Tan (Sarah Tan) said many gasoline-powered cars sold to Russia.

"After Russia's invasion of Ukraine in February 2022, many automakers left the country and as a result this gap was filled by Chinese manufacturers," she said. "In the first 11 months of 2023, car shipments to Russia were about six times higher by value than in 2022."

Mexico is also the main destination for Chinese gasoline car exports, while car exports to Belgium and the UK are mainly new energy vehicles, Tan said.

In fact, Mexico is the second-largest destination for Chinese cars after Russia, said Jorge Guajardo, a Washington, D.C.-based partner at Dacheng Global Advisors and a former Mexican ambassador to China.

Guajardo said in a telephone interview that the rapidly growing share of Chinese-made cars in the Mexican auto market is a "new phenomenon" because the Central American country has traditionally been highly protective of its auto industry, which is Mexico's largest employer.

While he said it was unclear exactly why Chinese cars were growing so rapidly in Mexico, part of the reason lay with international automakers.

He said, "The factories that they have in China that were meant for the Chinese market are now lost, and you're going to start exporting that capacity out of China." He noted that he believes "China has a serious overcapacity in automobile manufacturing."

Electric Vehicle Sales

By the end of 2023, China's new-energy vehicle penetration will reach 40 percent of new passenger car sales, much higher than the U.S.'s 7 percent or so.

A CNBC analysis late last year found that the rapid transition to electric vehicles is rapidly eroding the market share of international auto giants, which have been slower to release new models in the category. Germany's Volkswagen could see its worst performance in years in terms of sales in China.

Chinese battery and electric car company BYD has also overtaken Tesla. By 2023, the company will have produced more than 3 million total vehicles and will have outsold the U.S. automaker in electric vehicle sales in the fourth quarter.

BYD's overseas sales of new energy passenger cars topped 242,000 units in 2023, as measured by CNBC's public data. The company did not disclose comparable data for 2022.

Local Vs. Overseas Markets

Chinese automakers' share of the domestic auto market could increase to 75 percent by 2030, said Francois Wong, senior economist at Allianz Trade.

That would lead to a nearly 40 percent drop in sales of European cars in China, she said.

With Chinese-made electric cars also coming to Europe, the European Union has launched an investigation into the role of government subsidies on electric car production.

"I think they will soon realize they are targeting the wrong area," Guajardo said.

He said, "Chinese-made electric cars are superior to anything the Europeans produce, so you're just trying to stop something better." He added that these electric cars don't end up being the bulk of China's auto exports.

Guajardo expects these developments to lead to a trade war, at least in the case of Chinese car sales to Mexico.

"I hope it's electric cars, because if it's electric cars, they're not only good, they're a quality product that protects the environment," Guajardo said. "Gasoline-powered cars are just competition with Mexican products."