There was a time when America ruled car manufacturing and sales. Detroit’s “Big Three”—Ford, General Motors and Chrysler—set the pace for the global auto industry, accounting in the 1950s for 80% of sales. But today, automotive dominance increasingly comes from China. It produces 30% of cars, which is over double that of the U.S. Its brands now account for more than 50% of global EV sales. This shift is particularly evident in the Global South, where poor but upwardly mobile populations snap up affordable cars. Americans, meanwhile, can’t access these brands due to regulations that target China in particular.

I saw this firsthand during a recent trip to El Salvador, a country enjoying economic growth under President Nayib Bukele. The streets of San Salvador are packed with generic foreign brands like Hyundai and Toyota, but also a wide variety that would be less familiar to Americans.  

Take France’s Renault: it accounts for nearly a quarter of all car sales in El Salvador, yet hasn’t graced American showrooms in decades. Or Datsun, the scrappy Nissan spinoff that’s long since disappeared from American roads but lives on in places like this. Then there are the Chinese brands—BYD, Chery, Great Wall—that are everywhere. These cars may not have the glitz and glam of American or other Asian brands, but they’re priced lower, with the Chery Tiggo 2 Pro starting at $12,000 and the BYD Dolphin, an EV, going for under $14,000. The cheapest new car models in the U.S. sell in the upper teens and low $20,000s.

These lower prices help explain why, in 2023, China surpassed Germany as the world’s largest auto exporter. Much of this success can be attributed to a head start in cheap electric vehicles (EVs).

A Chinese sedan. (Image Credit: Zoytefan / Wikimedia Commons – Use authorized under Creative Commons Attribution-ShareAlike International 4.0 license.)

But it’s not just China that produces discount brands. The Japanese maker Suzuki has downscale models that are common throughout Asia but not seen in the U.S. Peroduas are made in Malaysia, while India has Mahindras and Tatas. And of course with the micromobility set, I found any variety of brands – South Asian tuktuks are commonly manufactured by Indian and Thai firms, and African motorbikes are often made by India’s Bajaj and TVS. 

Western automakers struggle to keep pace with these offshoot brands due to high labor costs, legacy expenses, and stricter environmental regulations. 

This slows them down in the competition for emerging markets, which of course is not just limited to El Salvador. Across the developing world, car ownership is booming. In China, it grew by 10.5% the past three years and is happening even faster in India. Infrastructure improvements fuel this, such as the $67 billion El Salvador is pouring into infrastructrre projects. 

But Americans don’t have this same access to cheap automobility, at least not on the new car market. The reason is tariffs and tight regulations. The Trump administration slapped 25% tariffs on Chinese vehicles as part of a broader trade war. The Biden administration upped these tariffs to 100% tariff on imported Chinese cars. Both played upon a legacy of protectionism within this industry; Ronald Reagan limited Japanese car imports, driving prices up by 8% during an era when Americans felt threatened by that country’s economic might.  

Things could get even more restrictive with Trump’s White House reentry and various geopolitical tensions. Other factors behind why America has a less diverse car market include environmental standards that foreign brands can’t meet; and the belief that the U.S. market is too crowded anyway. This means less choice and higher prices for American consumers. 

At heart with this issue is the bigger question about global competitiveness: the U.S. has long been losing market share of global auto sales. If U.S. automakers can’t compete on cost, protectionism will only delay the inevitable. At some point Americans will learn about cheaper Chinese brands and demand them, just as they long have for other foreign car brands. That is already happening in the Global South. 

This article featured additional reporting from Market Urbanist content staffer Ethan Finlan.