In June in Chongqing, the sweltering heat rises. What’s more anxiety – inducing than the weather is the collective anxiety in the automotive industry.
At the 2026 China Auto Chongqing Forum, many automotive company bigwigs and industry experts gathered. They shed the hype and flattery of previous years and began to face the most real problems in the market:
Falling sales, collapsing profits, ineffective price wars, and intensified involution…
Every word hits the pain points of the industry.
This is by no means a bearish outlook but a rational review of the industry’s development at a new stage. The once – high – speed – running automotive industry has officially bid farewell to the era of incremental dividends and entered the final stage of the stock game. This all – around warning reveals the truth of the cold winter in the auto market and also points out the core trends of industry transformation in the next few years.
The chill in the market is best reflected in the numbers. Wang Xia, the president of the China Council for the Promotion of International Trade Automotive Industry Committee, announced at the forum that in the first five months of 2026, the retail sales of domestic passenger cars declined significantly year – on – year. The industry’s profit margin has dropped to a new low. The overall revenue of the automotive manufacturing industry has continued to decline. The triple decline in sales, revenue, and profits has become the core tone of the auto market this year.
What’s more troublesome is that the price war that has lasted for three years has become ineffective.
Since the wave of price cuts across the board started in 2023, automotive companies have taken turns to offer discounts, and new cars have been launched in large numbers. However, the threshold for market excitement is getting higher and higher, and consumers are no longer impulsive to buy just because of low prices. Automotive companies are caught in a vicious cycle of “cutting prices to increase sales, making no profit, reducing R & D, having weak products, and relying more on price cuts to survive”.
Wang Xia said bluntly that the marginal effect of the price war is decreasing rapidly. Sales without profit support are just a numbers game.
Regarding the future trend of the industry, Li Bin, the founder of NIO, gave the most straightforward and cruel prediction: The domestic passenger car market may decline by 15% – 20% in 2026. The automotive industry has entered the most brutal stage of the elimination round.
This is not a short – term market fluctuation but an inevitable result after industry saturation. Now, the domestic car ownership is approaching the peak, the demand for essential car purchases has shrunk, and the demand for car replacement has become more rational. The incremental market has completely closed, and everyone is competing for the same piece of cake. Involution has naturally become a necessity.
At this forum, the participating bigwigs reached a high – level consensus: The era of extensive growth in the industry has completely ended. The next five years will be a cruel reshuffle period. Prioritizing survival and abandoning recklessness are the only choices for all automotive companies.
As the leader of traditional automotive companies, Li Shufu, the chairman of Geely Holding, made a speech with great guiding significance. He abandoned the previous expansion – oriented statements and proposed that automotive companies should actively downsize. Subsequently, Geely Automobile Group Co., Ltd. will orderly shut down, merge, and transfer relevant redundant entities and concentrate resources on core technologies and main platforms.
During the dividend period of the auto market, automotive companies could seize the market by expanding their scale. However, in the stock era, blind expansion of production and multi – point layout will only disperse their strength. Li Shufu’s active contraction confirms a logic: Scale does not entirely equal strength, and survival is the most important thing.
Wang Hui, the chairman of Avita, directly pointed out the pain points of industry involution and clearly stated that simply engaging in price involution is a dead end. The biggest problem in the current market is the prevalence of homogeneous competition. Products that all look the same, similar intelligent configurations, and highly overlapping pricing ranges have made consumers lose their sense of freshness.
Low prices not only fail to boost sales but also lower the brand value and make users question the product quality. Simply engaging in price wars will ultimately exhaust the company’s R & D confidence and lead to a dead – end cycle of low – end involution.
Xu Jun, the senior vice – president and chief operating officer of Leapmotor, used a popular analogy to summarize the industry changes. In the past, the auto market was like climbing a mountain. Those who were brave and fast could seize the opportunity. Now, it’s like surfing. The market environment is changing rapidly. Just having courage and speed is far from enough. One slight mistake and you’ll be eliminated by the industry wave.
The collective warnings from these bigwigs are not signs of pessimism and weakness but a clear understanding of industrial transformation. The Chinese automotive industry is facing many irreversible new trends, and a new industry order is taking shape.
First, low – profit normalization. Survival is the top goal. In the past decade, automotive companies generally followed the development logic of “scale first”. Even if they made thin profits or small losses, they still tried to boost sales. However, the current industry profit margin is already lower than the industrial average. Most automotive companies are caught in the dilemma of “selling more but earning less”.
In the future automotive market, ineffective scale will no longer be tolerated. Profitability will become the core survival threshold for automotive companies. Cutting inefficient businesses, optimizing cost structures, and implementing refined operations should become compulsory courses for all automotive companies.
Second, the price war is completely out, and the value war is the real battle. The cruel market has proven that there are no winners in the low – price involution. Consumers’ car – buying logic has completely changed. They no longer simply compare prices and parameters but value product technology, overall vehicle quality, intelligent experience, and brand service more.
Future market competition will completely move away from “who is cheaper” and turn to “who is more valuable”. Companies that can create differentiated products, build unique brand values, and provide high – quality user experiences can break out of the involution.
Third, the era of single – point blockbusters is over. Systemic capabilities determine the final outcome. This is easy to understand. Previously, Apple’s blockbuster strategy for mobile phones was like a stimulant in the automotive circle. Everyone wanted it, but after all, cars are not mobile phones, and no one can rely on one single advantage forever.
Now, with highly similar technologies and minimal product differences, a single – point advantage can no longer support a company’s development. Future competition will be a systematic comparison across the entire chain. Only by comprehensively making up for weaknesses and building a coordinated and efficient system can a company withstand market fluctuations.
Fourth, the industry reshuffle is accelerating, and the elimination of the weak is a foregone conclusion. The ultimate elimination round in the industry predicted by Li Bin has officially begun. In the next five years, a large number of small and medium – sized automotive companies that lack core technologies, have no brand barriers, and rely on following the involution trend to survive will gradually be eliminated by the market. Industry mergers and acquisitions will become the norm.
Market resources, user traffic, and policy dividends will continue to concentrate on high – quality leading companies. The automotive industry will move from a chaotic pattern of a hundred schools of thought contending to an oligopoly competition era where the strong get stronger.
In addition, global layout has changed from an optional track to a survival necessity.
With the intensified involution in the domestic market and the continuous compression of profit margins, going global has become the core way out for automotive companies to break through the dilemma. Wu Jian, an executive of GAC Group, said that the competition in the domestic auto market has become saturated. Automotive companies must actively go abroad and form the idea of “increasing sales at home and making profits overseas”.
Reviewing the 2026 Chongqing Auto Forum, all the warnings and reflections are conveying a core signal: The era of wild growth in the Chinese automotive industry has completely ended, and the era of speculation and following the trend is gone. The current cold winter in the industry is not a decline but an industrial upgrade through the survival of the fittest.
For automotive companies, it’s time to abandon illusions. This is the cruelest era for the Chinese automotive industry, but also the best opportunity for reshuffle.
When the tide recedes, the impetuosity is washed away, and the weaknesses are exposed. Companies with real technology, strength, and original intention will eventually survive the cycle and stand firm. Now, the elimination round has arrived. Only by deeply cultivating value and actively making changes can a company have the last laugh.
Let’s cheer for the Chinese automotive industry together.
This article is from the WeChat official account “SuperEV – Lab” (ID: SuperEV – Lab). The author is Qin Zhangyong. It is published by 36Kr with authorization.