Domestic Auto Industry to Be Dominated by Oligopolies with Multi-Brand Coexistence

Cui Dongshu, head of the Passenger Car Association under the China Automobile Dealers Association, emphasized that assessing the ultimate state of China's automotive industry should not merely focus on the number of existing automakers or car brands. Instead, attention should be placed on whether companies possess a complete in-house R&D system, scalable production capacity, and global supply chain capabilities. As electrification and intelligentization reshape the industry’s foundational logic, the sector is poised for clear differentiation: smaller independent automakers lacking full-chain support will continue to exit the market, while large conglomerates with core technological strengths will consolidate resources and deploy multi-brand strategies across all consumer segments. Under intense price competition and heavy R&D investment pressures, small standalone automakers struggle to sustain massive ongoing costs, leaving their survival space increasingly narrow. Cui explicitly stated that those destined for elimination are independent automakers without in-house R&D capabilities, without scale-efficient manufacturing facilities, and without integrated upstream-downstream ecosystems. In contrast, niche brands incubated by large groups are not at risk of being phased out. Leading domestic automakers have already transformed into comprehensive industrial groups encompassing R&D, manufacturing, supply chains, and talent development. By sharing unified mid-platform resources—including vehicle architectures, electric powertrains (e-motors, batteries, electronics), smart cockpits, global procurement networks, and production lines—they effectively distribute backend costs while deploying differentiated front-end brands to segment markets and avoid internal homogenized competition. Currently, leading groups widely adopt tiered brand strategies: mainstream brands target the affordable 100,000-yuan family car segment to ensure steady cash flow; premium sub-brands compete against joint ventures to enhance brand value; specialized brands—such as off-road or micro-mobility models—tap into niche demands; and high-end new energy brands serve as platforms for cutting-edge technology commercialization. This model allows niche brands to avoid bearing heavy asset investments alone, enabling profitability even with annual sales as low as 100,000 units—a resilience far exceeding that of independent automakers. Citing the century-long evolution of the global auto industry, Cui noted that “consolidation at the group level alongside flourishing brand diversity” is a universal international trend. Global leaders like Volkswagen Group, Toyota, and Stellantis all operate multiple brands atop unified technical foundations with clearly differentiated positioning: Volkswagen leverages shared MEB/PPE platforms spanning from mass-market to luxury performance vehicles; Toyota supports complementary brands like Toyota, Lexus, and Daihatsu through hybrid and pure-electric technologies; Stellantis maintains over ten legacy brand IPs, tailoring localized products for diverse regional markets. Drawing parallels with overseas experience, Cui argued that during industry consolidation, it is always the independent automakers lacking systemic support that disappear, while valuable niche brand IPs are typically acquired and sustained by larger groups—a pattern equally applicable to today’s Chinese market. Over the medium to long term, the number of leading Chinese groups possessing full-stack self-research capabilities and global expansion capacity may decline, but each surviving group will continuously expand its brand portfolio, simultaneously targeting family, off-road, premium, and overseas markets. The core of industry competition has shifted decisively toward comprehensive full-chain strength. Mergers and restructurings will persist, yet only fragmented, non-systemic small and medium-sized automakers face elimination. Diverse niche brands, backed by large conglomerates, will coexist sustainably. Ultimately, a handful of oligopolistic groups mastering core technologies—including e-powertrains, vehicle platforms, and global supply chains—will dominate key industry resources. Under their umbrellas, multiple brands will deeply penetrate distinct market segments, forming a mature landscape characterized by dominant players steering the industry while niche markets thrive in vibrant diversity.