There are well over a hundred car manufacturers in China, but only 10% could survive into the next decade, a new report claims. Some will merge with larger companies, while others will simply disappear if they can't reach profitability soon. There has been a steady stream of Chinese carmakers going bust, the most recent being Neta in June.
China has the world’s biggest car market, especially when it comes to plug-in vehicles. The market has been growing exponentially over the last decade, and it has seen an explosion in the number of car brands competing for buyers’ shortlists. However, the market now appears to have reached a more mature stage, where growth is tapering off and smaller brands are starting to disappear.
A few months ago, we looked into this and discovered that several seemingly promising plug-in car startups had gone out of business. These were brands that had their own stand at the 2024 Beijing Auto Show and, at the time, didn’t seem like they were about to go bust. But many companies have already gone away, and more are sure to follow, according to a new report from AlixPartners.
Some will simply go bankrupt and fade into history, while others will be acquired by larger players, much like everywhere else in the world. In the United States, for instance, there were 253 car manufacturers in 1908, and the number dropped sharply to just 44 names by 1929. This culling of car brands was attributed to the Great Depression of the 1920s, but it continued even after the economy recovered and through the post-World War II boom.
Eventually, it all consolidated into what became known as the Big Three (General Motors, Chrysler and Ford), all of which had many brands under their umbrellas. Something similar will inevitably happen in China, and the study by global consulting firm AlixPartners says that out of today’s 129 plug-in car manufacturers, only around 15 will remain afloat by 2030.
Each of the big brands will have average annual sales of around 1 million units, the report claims. What the report doesn’t directly state is the inevitability of this trend persisting and the number of carmakers continuing to fall. It didn't say which brands it thinks will survive, but I would assume that they include the biggest names like BYD, Geely, Changan and Chery.
The competition between carmakers in China is fierce, and it has even led to a price war, which, over time, will weed out all but the most competitive players as the market continues to consolidate. Even though Chinese regulators have asked automakers to stop trying to out-price one another, this practice will likely continue, even if not through direct price cuts but through other forms, such as finance or insurance deals.
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