Automakers Streamline Product Lines as "Ocean of Models" Strategy Fades

From January to May this year, 542 new vehicle models were launched in China’s domestic market, with the total for the first half of the year expected to reach approximately 630—equivalent to an average of 3.6 new models introduced daily and over 100 per month. These launches include all-new, facelifted, and next-generation models. However, most of these new models have struggled with weak sales and failed to achieve profitability. Data shows that fewer than 30 of the new models launched in the first half recorded stable monthly sales exceeding 10,000 units—less than 5% of the total—while nearly 40% sold fewer than 1,000 units per month. Industry estimates indicate that a completely new model must sell at least 100,000 units over its entire lifecycle to break even, yet the majority of models launched in the first half of this year have fallen short of this target. This situation has continued to weigh heavily on the automotive industry’s profitability. In the first quarter of this year, the average gross profit per vehicle dropped to RMB 14,000, down nearly 40% compared to the same period in 2025. From January to April, it further declined to RMB 12,000, a 12.1% year-over-year decrease, pushing the industry’s overall profit margin down to 3.4%. Meanwhile, retail sales of passenger vehicles (narrowly defined) in China fell by 20.2% year-over-year in the first half of the year, signaling the industry’s entry into a phase of stock-market competition. Some automakers that have already released financial results reported losses, while others remained profitable but saw significant declines in net profit. Against this backdrop, numerous automakers are adjusting their strategies—abandoning the “ocean of models” approach and shifting focus toward core products. Chinese brands such as Changan, Geely, Li Auto, and Xiaomi are streamlining their product portfolios, while foreign brands including Volkswagen, Toyota, and Nissan are taking similar steps—reducing the number of models and concentrating resources on key offerings. Industry experts anticipate that these strategic adjustments will significantly reduce the number of brands and models available in the market within the next two to three years, gradually eliminating the “ocean of models” phenomenon. As new model supply tightens, automakers are expected to stabilize pricing structures and improve per-vehicle gross margins. Following patterns observed in mature markets, some Chinese automotive brands may exit the domestic market altogether or pivot toward overseas expansion. Consumers can expect noticeably fewer vehicle choices in the future, potentially marking the end of the era characterized by a flood of high-value-for-money new models.