According to data from the China Association of Automobile Manufacturers, from January to August this year, China’s cumulative sales of passenger vehicles reached 13.322 million units, a year-on-year decrease of 12.3%. The Chinese auto market has continued the downward trend that began in 2018. At the policy level, mounting pressures are also at play: subsidies for new-energy vehicles are being phased out rapidly, and the National VI emission standards have been implemented ahead of schedule, sharply increasing industry pressure. As a result, Chinese brands are facing significant challenges as they continue to move forward.

Meanwhile, another vibrant scene is unfolding within the industry. With policy easing, multinational automakers are actively seeking to expand their presence in China. Chinese brands continue their upward trajectory, repeatedly launching new brands and driving up the prices of new vehicles. Their role in the global industry is also becoming increasingly active—some are setting up factories overseas, while others are investing capital abroad. Whether they’re domestic or foreign brands, established or emerging players, all are simultaneously introducing products equipped with advanced driver-assistance systems. Smart connectivity systems have almost become standard features in new vehicle models.

The interplay of upward and downward forces has given rise to a new business model for China’s automotive industry. As technological transformation sweeps across human civilization, the automotive industry—long steeped in a century of tradition—is inevitably being pushed to the brink of a transformative tipping point. In this turbulent market landscape, securing a solid foundation has become the key to proactively shaping and positioning the future development of the industry.

The decline in China’s auto sales is the result of a confluence of multiple factors, including broader economic trends, the global trade environment, and policy adjustments. Moreover, set against the backdrop of declining global auto sales, assessing China’s current auto market situation calls for even greater caution and rationality. Does the market still hold significant potential?

First, the manufacturing sector continues to show strong momentum. Although concerns about the erosion of cost advantages have been weighing on manufacturing development, China’s manufacturing sector is gradually shifting its comparative advantage toward innovation, efficiency, and the demographic dividend from human capital.

After years of accumulation, the manufacturing sector has developed a relatively complete industrial chain and supporting capabilities. Enterprises’ innovation capabilities have been steadily improving, with some companies now at the forefront of industry technology. High-tech manufacturing and strategic emerging industries are growing faster than the average industrial growth rate. The quality of human capital continues to improve, and China ranks among the world’s top countries in terms of the number of engineering and technical personnel. Each year, China also sees approximately... 8 million new college students. With the deepening of market penetration, the upgrading of consumption, and the introduction of policies aimed at boosting automobile sales, demand in third- and fourth-tier cities and central and western regions has been stimulated. There is no doubt that in this region, which boasts... On a vast land inhabited by 1.4 billion people, the consumption potential remains enormous. This is precisely the main reason why numerous multinational corporations continue to ramp up their investments in China.

Tesla’s first overseas factory is located in China—BMW. A 3-billion-euro expansion of its Chinese factory—brands such as Audi, Volkswagen, and Renault are seeking new partners in China... Although China’s auto market has entered a phase of “high base and steady growth,” automakers are voting with their feet, demonstrating their confidence in the Chinese auto market through concrete actions.

Market competition is becoming increasingly intense, placing ever-stricter demands on companies’ technological capabilities and product quality. To withstand the storms brought by technological change, has the foundation of Chinese brands truly become solid? Why not take a closer look at a series of figures?

In 2018, global sales of new-energy vehicles reached 2 million units, with China accounting for 1.25 million units—once again exceeding half of the global total, at a share of 62.5%. In 2018, among the top five global brands in terms of pure-electric vehicle sales, three were Chinese brands. Among them, BAIC New Energy is making a strong push toward premium positioning across both its products and market strategy; BYD, while experiencing rapid growth in pure-electric models, has also performed exceptionally well in hybrid vehicles; and Zotye focuses primarily on small cars, targeting third- and fourth-tier cities. With strong sales, clear brand positioning, and high product recognition, Chinese brands have firmly established themselves as pioneers in the new-energy vehicle sector.

According to forecast data compiled by the Japanese research firm Fuji Keizai, by 2035, the global market size (new car sales) for battery electric vehicles (EVs) will reach 22.02 million units. The forecast also indicates that China, as the global growth hub for the pure EV market, will account for 50% of the global market size by 2035.

Compared to lofty aspirations, Chinese brands are now more focused on seizing the opportunities of the present. No longer content with success in specific regions or niche markets, Chinese brands are setting their sights squarely on the global stage. Geely’s acquisition of Volvo and Lotus has become a prime example of overseas mergers and acquisitions in China’s automotive industry. The cross-shareholding between BAIC Group and Daimler has opened up new possibilities for cooperation between Chinese and foreign automakers in the “post-joint venture” era. The launch of Great Wall Motors’ Russian plant not only marks the beginning of a new global journey for the brand itself but also underscores the ambitious aspirations of a new generation of Chinese automotive professionals to expand into international markets. SAIC’s sales exceeding 10,000 units in countries and regions such as the UK, Thailand, Indonesia, and Chile reflect overseas consumers’ growing recognition of Chinese automotive brands and services.

After decades of arduous and extraordinary efforts, Chinese brands have carved out upward space and pathways for themselves.

The integration of the internet ecosystem with social life has become the defining hallmark of humanity’s transition into a digital civilization. While retaining their fundamental role as modes of transportation, automobiles—thanks to their unique characteristics—have emerged as an ideal platform for the Internet of Everything. The widespread adoption of 5G technology and the advancement of artificial intelligence have made intelligent and connected vehicles a practical reality. This transformation not only reshapes industry demands for products and design but also redefines the rules and logic of industry competition.

Transformation has become a shared choice: BMW plans to transform itself into a mobility technology company, while Toyota aims to become a “provider of mobility solutions.” Collaboration is also a major trend—Ford has teamed up with Volkswagen to accelerate its efforts in autonomous driving; in February of this year, BMW Group and Daimler announced a strategic alliance focused on self-driving vehicles.

Chinese automakers are fully competitive when compared with a host of established industry giants. Three years ago, Roewe RX5 first launched the “internet-connected car” brand, and its stellar sales quickly ignited a new popular buzzword. New automotive forces such as NIO and XPeng have carried pure internet DNA from their very inception. Hozon Auto has proposed the “Three Intelligence Strategy,” outlining a vision for the future in which smart cars and intelligent transportation systems will jointly build smart cities.

As early as ten years ago, Changan had already assembled a team to conduct research on intelligent technologies. Today, the company has mastered over 200 intelligent technologies and, leveraging 5G communication networks, has reduced latency to around 15 milliseconds, enabling L4-level autonomous driving. According to Changan’s projections, vehicles equipped with 100% driver-assistance systems are expected to become a reality next year. To accelerate the development of autonomous driving, BYD has embraced an open ecosystem called D++, actively recruiting talented developers from around the world. BYD has also opened up access to 341 sets of sensor data for global developers, creating the world’s first open platform for automobiles. Initial results of the collaboration with Auto X, an autonomous-driving company based in Silicon Valley, are beginning to emerge.

Technology and mobility are also responding to the transformation in vehicle manufacturing. Baidu Apollo, founded in 2017, already has dozens of partners, including Chinese automakers as well as international brands such as Honda, BMW, Daimler, Volkswagen, Intel, and NVIDIA. Huawei, which has publicly stated that it “won’t build cars,” has established a Smart Car Solutions Business Unit, determined to break the oligopolistic dominance of international giants in the automotive electronics industry’s Tier 1 systems. Currently, Huawei’s HiCar ecosystem boasts more than 30 automotive manufacturers as partners, with over 120 model variants in collaboration.

The joint ventures between automakers and mobility service providers—both of which require substantial investment—are becoming increasingly common. Toyota and Didi Chuxing have officially established a joint venture called Fengju Mobility; BYD has also chosen to partner with Didi to jointly fund and launch the mobility brand “Yadi New Energy.”

Automotive companies are reluctant—or rather, afraid—to miss the transformation opportunities brought by intelligence, especially Chinese brands. For Chinese brands, now is a pivotal moment when two historic opportunities—technological innovation and brand upgrading—converge. Intelligence has leveled the playing field for all automakers. Chinese brands have already taken a head start in the new-energy vehicle segment. Leveraging China’s extensive advantages in infrastructure, users, and applications within the internet ecosystem, China’s automotive industry will accelerate its transition from big to strong and will have the chance to reshape the global automotive landscape that has remained largely unchanged for a century.

The development of the automotive industry is a microcosm of China’s economic, livelihood, market, and technological advancements. Driven by the tremendous cohesion and centripetal force that propel the Chinese people forward in pursuit of their dreams, China’s automotive industry is poised to usher in its next glorious chapter. Under the combined influence of market dynamics and technological revolution, Chinese brands are being propelled into a new era of brand elevation and intelligent competition. As consumption upgrades and smart transformations deepen, should we reassess the allocation of resources between brand philosophy and hardware configurations? With the rise of new forces and the influx of tech giants, amid the surging tide of technological change—will it be a matter of transformation or revolution?