Eight Legacy Automakers Permanently Lose Production Licenses, Exit China Market

In June 2026, the Ministry of Industry and Information Technology (MIIT) officially removed the whole-vehicle manufacturing qualifications of eight automakers—FAW Xiali, Brilliance Auto (independent brand), Zotye, Leopaard, Lifan, Hawtai, BAIC Yinxiang (Hansoo), and the original Haima—from its official list in Announcement No. 408 and permanently froze these licenses. This move signifies that these companies have lost their legal eligibility to produce vehicles, and their production lines have been fully sealed. These automakers once played significant roles during China’s early automotive mass-market phase: FAW Xiali led domestic sedan sales for 18 consecutive years, peaking at 253,000 units sold in 2011; Zotye sold 330,000 vehicles in 2016; Leopaard, backed by military-industrial expertise, developed rugged off-road vehicles widely used for government fleets; Lifan transitioned into automobiles from motorcycles; and Brilliance Auto, Hawtai, BAIC Yinxiang, and the original Haima all held notable market shares during different periods. Analysts attribute their collective exit primarily to a lack of core technological capabilities. Most relied heavily on “badge-engineering” assembly models with severely insufficient R&D investment. For instance, annual R&D expenditures at Zotye, Haima, and Brilliance ranged merely from tens of millions to just over one billion yuan—far below the hundreds of billions invested annually by leading automakers—rendering them unable to meet new requirements such as electrification, intelligent connectivity, and the stringent China VI-b emission standards. Some even diverted funds into non-core sectors like real estate and finance, further eroding their vehicle-making capabilities. Since 2012, MIIT has implemented an enterprise exit mechanism, and in early 2026, it mandated a compulsory “30,000-kilometer reliability validation” as a new entry barrier. Coupled with a 19.5% year-on-year decline in passenger vehicle retail sales from January to May 2026, these companies’ operational space was completely squeezed out. Market signals had long been evident: residual values of their models plummeted, used-car dealers widely refused to accept them, and aftermarket parts supplies gradually ceased. Currently, some of these companies’ production facilities and technical teams have been acquired by automakers such as GAC Aion and Geely, enabling reuse of capacity and resources. The exit of these eight automakers marks the definitive end of an era in China’s auto industry characterized by imitation, low-price strategies, and reliance on joint-venture dividends.