This is an analysis of industry consolidation and market normalization trends in the second part of the "nei juan" (excessive competition) in China's automotive industry.
In China, following excessive production capacity issues in the steel and coal industries in the 2010s, mergers and reorganizations progressed. In 2016, state-owned steel giants Baosteel Group and Wuhan Iron and Steel Group merged to form Baowu Steel Group, China's largest steelmaker. In the automotive industry, in February 2025, China South Industries Group and Dongfeng Group announced preparations for management integration with other central state-owned enterprises, drawing attention, but this was subsequently postponed indefinitely. He Xiaopeng, Chairman of Xpeng Motors, presented a forecast that competition among Chinese new energy vehicle (NEV) companies would go through 3 years of elimination competition followed by a second stage of 3-5 years of competition, ultimately leaving 7 or fewer companies (pessimistically 5 or fewer), suggesting that industry consolidation would further accelerate from 400 companies 10 years ago to the current approximately 40 companies.
Regarding market normalization, government initiatives based on antitrust law and anti-unfair competition law have accelerated. In January 2024, the State Administration for Market Regulation sent notices to Chinese-related corporations of five companies - Jaguar Land Rover, Audi, Volkswagen, BMW, and Mercedes-Benz - urging rectification for risks of antitrust law violations. From June 1, 2025, the revised "Regulation on Payment Protection for Small and Medium Enterprises" was implemented, stipulating that payments from large enterprises to SMEs must be made within 60 days of delivery, with major finished vehicle manufacturers successively announcing their response policies.
On July 9, the Ministry of Industry and Information Technology opened an online portal for filing complaints about major automotive companies' fulfillment of payment deadline commitments, accepting complaints about cases where commitments to pay within 60 days are not fulfilled. Additionally, through the revised "Anti-Unfair Competition Law" passed on June 27 by the Standing Committee of the 14th National People's Congress, from October 15, Article 15 explicitly prohibits abuse of dominant position by large enterprises, forbidding unreasonable payment deadlines, payment methods, and payment delays imposed on SMEs.
Regarding sales prices, on June 3, the China Automobile Dealers Association published a "Proposal to Oppose 'Nei Juan' Competition and Promote High-Quality Development of the Automotive Sales Agency Industry," calling for avoiding frequent adjustments to sales policies and product prices that make it difficult for dealers to sell and negatively impact consumers' brand image. On June 5, it was reported that the Ministry of Industry and Information Technology and others convened executives from more than ten companies including BYD, Zhejiang Geely Holding Group, and Xiaomi Technology, urging them to refrain from selling below cost and excessive price cuts.
In export trends, according to the China Association of Automobile Manufacturers (CAAM), China's automotive exports in 2024 increased by 19.3% year-on-year to 5.859 million units, and in the first half of 2025, increased by 10.4% year-on-year to 3.08 million units. While NEVs accounted for 21.9% of automotive exports in 2024, this rose to 34.4% in the first half of 2025, with NEV exports increasing amid global efforts toward decarbonization.
The article confirms that resolving "nei juan" has become a key concern for the Communist Party and government, as emphasized on July 1 at the Central Financial and Economic Affairs Commission chaired by President Xi Jinping regarding the need to manage companies' low-price and disorderly competition, concluding that future developments warrant attention.