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five years ago it was 5:4, now it’s 3:6. this is a comparison of the market shares of mainstream joint venture brands and independent brands.

"what should consumers do if they no longer buy domestically produced cars?" this topic has triggered heated discussions. nowadays, the status between independent brands and joint venture brands has been interchanged. what happened and why is this?

judging from the data, life of joint venture car brands is indeed difficult. according to the latest statistics from the passenger transport association, north and south volkswagen, north and southtoyotathe market share of mainstream joint venture brands has dropped to 25.3% in august. even with the addition ofbenz、bmw、audi、volvoand other luxury brands,the overall market share of joint venture car companies is only 36.8%. the market share of joint venture brands has shrunk sharply, which is in sharp contrast to the fact that they used to occupy more than half of the chinese automobile market.five years ago, the german brand's passenger car sales accounted for as high as 25%, but at that time, the annual retail sales of independent brands accounted for only 37.9%.

mainstream joint ventures usually refer to sino-foreign joint ventures with greater influence, higher market share, strong brand strength and extensive product lines in the automotive market, including volkswagen, toyota,honda, modern, universal,fordother joint venture brands in china do not cover luxury brands. according to consumers' purchasing habits, its product prices and brand power are between independent brands and luxury brands. the joint venture car companies mentioned in this article mainly refer to this market segment. as the products and brand power of china's own-brand models increase, and the prices of luxury brands drop, mainstream joint venture car companies are under tremendous pressure.

while the status of joint ventures and independent markets has been reversed, the development of china's new energy vehicle industry has entered a fast lane. in july 2024, not only will the sales volume of new energy vehicles surpass that of fuel vehicles for the first time, but the penetration rate will exceed 51%.chinese car companies have achieved rapid market growth by relying on new energy and intelligent technologies, which has put joint venture car companies at an increasingly disadvantaged position in the competition with independent brands.

because of this, it is difficult for joint venture brands to continue to lead the chinese market by relying solely on their advantages in the traditional fuel market. superimposed on the price war that has lasted for nearly two years, the foreign shareholders of the joint venture brand have become entangled - china is not only the world's largest automobile consumer market, but also a highland for the application of intelligent network technology; but in the price war, it is a head-to-head battle with independent brands. detrimental to one's own interests. selling cars in china can no longer continue to use simple borrowing. instead, it must be customized and original developed according to the chinese market to be competitive.

against this background, leading joint ventures including volkswagen and toyota have begun to accelerate their layout around technologies such as solid-state batteries, smart driving, and smart cockpits. according to their plan, 2026 will be a critical point to see whether the original smart electric models launched at that time can regain market share.

will there be more variables in the share of joint venture car companies in china in the future? how many brands will be eliminated from the competition? which joint venture car brands can stabilize the market? the industry has not made any assertions about this, but the market does not have much time left for them.

according to data from saic group, from january to july 2024, saic general motors' production and sales were 220,000 and 240,000 vehicles, a year-on-year decrease of 59% and 55% respectively. behind this, the sales volume of the american camp dropped by more than 20% year-on-year, the largest drop among all countries.

japanese cars, which are popular due to their easy maintenance and high value retention rates, are not spared either. in august, the retail share of japanese brands was only 12.6%, which was the lowest point in recent years. although the german brand showed resilience, its passenger car retail share also fell to 16.6%. the performance of korean and french car brands is even more dismal, with their market shares falling to 1% and 0.2% respectively. for comparison, five years ago, the retail shares of german and japanese brands reached 25% and 22% respectively, while the shares of american and korean brands also remained at 8.5% and 4.8% respectively. limited by the statistical classification of the database, the above country-specific data already includes luxury car brands from various countries with relatively strong sales. if this part is removed, the decline in sales of mainstream joint venture cars will be even more significant.

behind these data is not only the collective decline of the car companies themselves and joint venture brands, but also the tremendous pressure faced by dealers.the all-china federation of industry and commerce automobile dealers chamber of commerce released a survey on dealers’ satisfaction with oems in 2024. the survey results showed that the satisfaction level in 2024 was 56.1%, creating a new low for dealers’ satisfaction with oems. at the same time, the decline was also the largest ever. maximum.

(source: ic)

according to a report by securities times,in the first half of 2024, nearly 2,000 new 4s stores were withdrawn or closed across the country, which was almost the number of withdrawals in the whole of last year.

"in the future, the trend of store closures of korean, american, and some japanese brands will continue." a senior executive in charge of sales of a mainstream joint venture car company said frankly. recalling the changes in the past five years, he couldn't help but sigh. before the epidemic, the withdrawal of 4s stores authorized by joint venture brands was news reported by the media. but now, as long as there are not large-scale store closures, it is considered a normal phenomenon.

zhang yan, a car sales consultant, mentioned to us: "in the past two years, i have worked for many joint venture brands, including japanese, german, and american brands." she explained that frequent job-hopping was not her intention, but because of her the service 4s stores have been closed one after another.

the shrinking of the dealer system is the epitome of the decline of joint venture brands in the chinese market. the person in charge of a guangqi honda 4s store in beijing revealed that before 2023, the monthly income of sales consultants could still reach 8,000 yuan to 9,000 yuan, but now it has dropped to about 4,000 yuan.

cost reduction and efficiency improvement are not just slogans, they are everywhere. one afternoon in late june 2024, the outdoor temperature in beijing had soared to 39 degrees. we were visitingdongfeng nissan, gac honda,buick、chevroletwhile waiting at a mainstream joint venture brand 4s store, i found that the air volume of the indoor air conditioner was extremely small. in order to cool down, some sales have to bring their own small fans. a salesperson at one of the 4s stores jokingly said that the company broke the air conditioner in order to save money.

not only that, at the guangzhou automobile honda factory thousands of miles away, new air conditioning temperature settings were also made in the summer of 2024. the cold air was adjusted to 28 degrees, which was 2 degrees higher than in previous years. in order to save more electricity costs, the factory has clearly managed the lighting time in the workshop. as soon as the work is finished, the lights must be turned off, leaving no one behind. in addition, the factory no longer provides free cleaning services for employees’ uniforms, and further restrictions are placed on travel approval.

the other side of cost reduction and efficiency improvement is the superposition of worries such as overtime, personnel optimization, production reduction, and production suspension. this also made front-line employees who have worked at guangqi honda for more than ten years realize for the first time that there is no longer the so-called "you can see the end at a glance" in the joint venture car company.

after sales fell, both guangqi honda and dongfeng honda announced personnel optimization and production capacity reduction. honda china plans to reduce annual production capacity from 1.49 million vehicles to 1.2 million vehicles. although the volkswagen group has a strong brand foundation in the chinese market, facing the challenges of new energy vehicles and smart vehicle technology, it also has to re-examine its production capacity layout of more than 5 million vehicles.

shortly after guangzhou automobile honda announced personnel optimization, the faw-volkswagen foshan plant also decided not to renew the labor contracts of some employees whose contracts have expired. according to people familiar with the matter, this is just the beginning. in addition to faw-volkswagen, saic-volkswagen will also make corresponding adjustments within the year.

changan ford, which has rarely spoken out in recent years, will also move all employees working in lujiazui, shanghai, to yangpu district, where rent costs are lower, this month.

along with its move away from the core area, there is also the voice of joint venture car companies. in recent years, joint venture car companies have gradually scaled back their marketing strategies. the joint venture brand, which once made high-profile appearances at auto shows and important launch events, has now become reticent. including media interviews at previous auto shows, they have gradually been reduced in scale or even canceled directly.

(source: ic)

according to wang yajin, professor of marketing and deputy provost (research affairs) at china europe international business school, not building a brand is a luxury choice. this will not save much money and may cause more waste.

she believes that in the existing market, the primary form of competition is price war, and companies with strong brand power can keep prices unchanged through differentiated value and avoid falling into vicious competition. if the brand power is too weak, the cost of acquiring customers for the product will be very high, and what you gain will be lost.

"behind closed doors, without exception, the first thing to solve is cost reduction." an executive of a mainstream japanese joint venture car company told us that for this reason, they made major internal structural adjustments in early 2024, including departmental the purpose of mergers, one person holding two positions, etc. is to save marketing, financial and other costs and strive to protect the end market. among them, the largest expenditure is used for dealer subsidies.

despite this, stabilizing the foundation is still extremely difficult. in the eyes of the above-mentioned executives, the previously intensifying price war is like a huge gamble that has deviated from normal business logic. although they do not believe that selling cars at a loss is sustainable, in order to try their best to maintain their market share, they can only bite the bullet and carry on. . because the consequences of being marginalized are already clear. suzuki, acura, mitsubishi, ds and other brands eventually exited the chinese market, starting from the loss of market share.

former star models such as the accord, camry, passat, magotan, lacrosse, and mondeo all hit record low prices in the past summer, but the results were not satisfactory.

according to third-party statistics, in the first half of 2024, accord's cumulative sales were 68,596 units, a year-on-year decrease of 15.4%. dongfeng honda's flagship model yingshi pai, which has also joined the price reduction trend, has a relatively stable market performance, with only a slight decrease of 3.5%. however, the cumulative sales volume is only 23,728 units, which is only about one-third of the accord.

the sales of camry and avalon, which are toyota's flagship sedans in the north and south, in the first half of 2024 are also far behind last year. among them, the cumulative sales of camry were 61,957 units, while the asia dragon only completed wholesale sales of 24,019 new cars. both cars experienced a year-on-year decrease of more than 40%.

the flagship sedans of the american buick and chevrolet brands also face severe challenges. in the first half of 2024, the cumulative sales of buick lacrosse and chevrolet malibu were only 7,724 and 3,216 units, a year-on-year decrease of 38.5% and 46.6% respectively.

(source: ic)

specifically, as of june, the national sales of malibu were only 21 units, a year-on-year decrease of 98%. you know, the mid-range model of this car has dropped to 120,000 yuan in the end market, which is even far lower than the price in the united states. the gl8, which has always been responsible for the sales of the buick brand, also suffered the biggest impact in history in the first half of 2024. the cumulative sales were halved year-on-year, only 26,462 units, a 53.2% decrease from the same period last year.

like the above-mentioned models, the faw-volkswagen magotan and saic-volkswagen passat have also reduced their car prices to cabbage prices.among them, the lowest price of a naked passat purchased internally has dropped to 110,000 yuan;the new-generation magotan, which has just been launched, has a guide price of 174,900-253,900 yuan compared with the previous generation's 189,900-316,900 yuan. it continues to ensure market share through price cuts.

this series of data reflects that the competitiveness of the traditional fuel vehicle market is rapidly losing.

“the collapse of flagship products of multi-national joint venture car companies should arouse companies’ vigilance about brand value."analysts told us that in the traditional fuel vehicle market, joint venture brands still have absolute competitive advantages, but as the penetration rate of new energy vehicles continues to increase, it means that the share of traditional fuel vehicles is narrowing, and competition among enterprises is also increasing. it's bound to become more intense.

plug-in hybrid electric vehicles (phev), as an important technology path in new energy vehicles, have brought some hope to joint venture brands. according to data from the passenger car association, in august 2024, phev’s retail share in the new energy passenger vehicle market will reach 42%, with a growth rate far exceeding the 16% of pure electric models. many joint venture brands have begun to expand into this market segment on a large scale, hoping to attract more consumers.

invest or wait and see, retaining the market is not easy

facing the single market with the largest sales volume in the world, no car company is willing to give up easily, but it is still prudent to continue to increase investment. different brands have different choices.

"it is unacceptable for foreign parties to engage in price wars at all costs, because it neither conforms to business logic nor harms corporate interests."executives at mainstream joint venture car companies told us that, especially for foreign parties to joint venture car companies, the chinese market is important, but when profit margins are severely squeezed, they will inevitably reweigh the need for continued investment. after all, china has it is not the only sales market for these automobile giants, nor is it the market with the highest revenue share. therefore, they will be more cautious when increasing investment. this is not the case for the chinese side. their positions are different and the pressure on their shoulders is greater.

the above-mentioned executive said frankly,price wars and changes in the new energy vehicle industry have brought unprecedented challenges to joint venture car companies. in more than ten years of working in the industry, he felt for the first time within the company that the chinese and foreign parties were out of step in terms of goals and investments.

analysts pointed out that in fact, this is also an important reason why joint venture car companies have difficulty beating byd in the price war. therefore,whether the joint venture car companies can quickly reconcile their differences in interests, continue to unify their steps and actively break the situation has become a prerequisite for whether they can continue to delve into the chinese market.

according to a source from toyota's joint venture, from 2024 to 2026, its two joint ventures in china and lexus china will enjoy certain financial support from the headquarters, such as the amount of money that needs to be handed over to japan as agreed every year. the profits will be kept in their own hands, with the purpose of coping with the price war in the chinese market, stabilizing the dealer system, and the impact of the changes in new energy vehicles.

"this is the support obtained after many communications between the japanese side in china and toyota headquarters. as for why it is 3 years instead of 5 or 10 years, the answer is not complicated." the above-mentioned person explained that, firstly, 2026 in 2018, toyota will make breakthroughs in the core technologies of new energy vehicles, including four types of new-generation batteries, including performance lithium-ion batteries, popular lithium iron phosphate batteries, high-performance lithium-ion batteries and all-solid-state batteries. it will be put into the market sequentially from this year; secondly, for toyota, the risk of the five-year decision is too great. they need to consider whether it is worth sacrificing long-term profits to stabilize the chinese market. after all, they will increase investment in markets with faster growth. it is in line with basic business logic.

the volkswagen group is more active. they have invested nearly 50 billion yuan in china since october 2022 and have in-depth cooperation with local technology companies such as xiaopeng motors. in 2026, volkswagen plans to launch four smart pure electric models based on a new electronic and electrical architecture in china.

according to the car company retail rankings for august this year provided by the passenger car association, there are currently only four joint ventures in the top ten, namely north and south volkswagen and north and south toyota. dongfeng nissan, which once ranked on the list, has long disappeared. trace. the deep sense of crisis made nissan ceo makoto uchida decide to carry out in-depth reforms.

he said that if nissan continues to do things the way it has been in the past, it is unlikely that nissan will survive in china, and in order to strive to stay in china, they must make strategic adjustments. to put it simply, it means designing and manufacturing localized nissan cars in china, instead of following the previous method of conducting research and development in japan and then adapting to the chinese market.

opportunities still exist, and reshaping the industrial chain is the key

will there be more variables in the share of joint venture car companies in china in the future? can they catch the fast ship of china's new energy vehicle development? according to zhong shi, an expert from the china automobile dealers association expert committee, it is difficult to give a firm answer. after all, while joint venture brands are catching up, independent brands will not stand still.

in the field of intelligence and new energy, independent automobile brands have taken a step ahead, while joint venture brands have been slower to respond. now joint venture brands are accelerating to make up for their shortcomings. according to the strategic planning and production rhythm of each company, strong product competition from independent brands and joint venture brands will come soon.

"success or failure may be known in two years." master zhong told us that by then, the technological achievements and mass-produced models of joint ventures such as volkswagen and xpeng, gac toyota and momenta, and chinese local technology companies will be put on the market. as long as they if it can successfully attract chinese consumers, joint venture car companies will still have a place in the future market structure.

in addition, he also emphasized thatthe contributions made by joint venture car companies to the development of china's automobile industry over the past 40 years should be fully recognized. they have brought production lines, technologies, processes and management standards into china and cultivated the entire chinese automobile industry chain. today, china's automobile market is a market with full and fair competition. as long as the product is strong, consumers will naturally recognize it.

(source: ic)

"whether it is a joint venture brand or a foreign-invested brand, the car companies that are currently actively expanding in china are mainly japanese and german companies." ying chongxi, an analyst in the automotive and parts, technology and telecommunications industry at nomura china, told us.

from a supply chain perspective, he believes that although japanese companies and chinese automobile brands have cooperated to launch pure electric models, which may include some elements of the chinese industrial chain, and there may even be further cooperation in the future, the industry is currently not no concrete results were seen.

"of course, judging from the trend, both japanese and german companies are willing to discuss with more industrial chains how to reshape their own corporate image in china, and at the same time, launch products that are in line with the evolution trend of the chinese automobile market and are in line with china's products based on consumer preferences and values ​​are the core factors that determine whether the joint venture can continue to develop in china," ying chongxi said.

in his view,the main reason why china's independent brands can achieve their current results, perform well in the high-end market, and continue to encroach on joint venture shares is that chinese car companies are moving faster and more resolutely on the road to new energy and intelligence. therefore, for joint venture car companies, expanding and strengthening cooperation with chinese car companies and chinese industrial chain companies may be their real way out. after all, from a competitive perspective, we must first ensure that our products are attractive. this is the first thing that joint venture car companies must do.

on the other hand, is the higher the market share of independent brands, the better? a head of public relations for a leading domestic independent brand said that is not the case.

he explained to us,the automobile industry naturally has the basis for global collaboration. in a large market, we are among you, and we are among you, allowing each other to learn from each other in the confrontation. it is not a good thing when the entire consumer market is flooded with products from one country. this means that it is difficult to enjoy the dividends from investment in related industries in other countries, and eventually barriers will appear between markets.