The Chinese car market is a bustling industry with over a hundred car manufacturers vying for a piece of the pie. However, a recent report suggests that only 10% of these manufacturers will survive into the next decade. Some may merge with larger companies, while others may face the unfortunate fate of disappearing if they cannot achieve profitability soon.
The market in China, especially for plug-in vehicles, has seen exponential growth over the past decade. With a plethora of car brands competing for consumers’ attention, the competition has never been fiercer. Unfortunately, this intense competition has led to a steady stream of Chinese carmakers going out of business, with the most recent casualty being Neta in June.
A report from AlixPartners predicts that out of the 129 plug-in car manufacturers in China today, only around 15 will remain afloat by 2030. These surviving brands are expected to have average annual sales of around 1 million units each. While the report does not specify which brands will survive, it is likely that established names like BYD, Geely, Changan, and Chery will be among them.
The competition among carmakers in China has even led to a price war, with companies trying to out-price one another to attract consumers. This cutthroat environment will ultimately weed out all but the most competitive players as the market consolidates. Despite regulatory efforts to curb this practice, it is expected to continue through various means like finance or insurance deals.
Industry experts like Xpeng CEO He Xiaopeng and automotive engineering professor Zhu Xican believe that only a handful of large carmakers will survive in the next decade. Zhu predicts that any carmaker selling fewer than 2 million units annually won’t be able to sustain ongoing R&D costs and will struggle to keep up with technological advancements.
To survive and thrive, Chinese automakers will need to expand their presence in other major markets like Europe and Asia. The AlixPartners report suggests that Chinese automakers could double their market share in Europe by 2030, reaching 10%. With a strong foothold in their domestic market and ambitions to expand globally, Chinese car brands are poised for success, but only the most competitive and innovative players will prevail in the long run.