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Foreign automakers in China that sell fewer than 300,000 units annually face an up to 80% chance of exiting the market, with at least four companies expected to depart in the coming years, according to a recent report.
Automakers with annual sales between 100,000 and 300,000 units face a 50% to 80% possibility of leaving, with four or five likely to exit soon. Meanwhile, those in the 300,000 to 600,000 sales range face a 20% to 50% chance of withdrawal, with two to three expected to exit.
The likelihood of market exit is strongly linked to market size, the report notes. Currently, more than 45 foreign and joint venture car makers operate in China, representing roughly 40% of all passenger vehicle manufacturers.
Among joint ventures, brands like Dongfeng Peugeot-Citroën, Chery Jaguar Land Rover, Smart, Changan Lincoln, Changan Mazda, and Jiangling Ford sold fewer than 100,000 vehicles last year, according to insurance registration data.
Over recent years, the landscape of Chinese automaking has changed significantly, with domestic brands increasing their share to 65% in the first 10 months of this year—up from 36% in 2020—while foreign competitors’ share declined from 64% to 35%. Smaller automakers such as Japan’s Suzuki Motor and Mitsubishi Motors have already exited during this restructuring phase.
Data from the China Passenger Car Association shows that German brands accounted for 14% of retail sales last month, Japanese brands 12%, US brands 5.7%, and South Korean brands just 0.9%.
To stay competitive, leading foreign automakers have accelerated their focus on an “in China, for China” strategy, with Chinese teams within joint ventures gaining more influence over product development. For instance, Volkswagen established its China Research Center and created a shared modular electric vehicle platform tailored exclusively for China. Toyota launched a local electric and intelligent vehicle R&D center, while Nissan set up Nissan Technology Development Shanghai, specializing in autonomous driving, connectivity, and new energy tech.
Some foreign automakers are also adopting an “in China, for the world” approach, leveraging China’s advances in electrification and smart tech to share innovations globally. BMW, for example, developed a voice interaction system based on Alibaba and DeepSeek’s large language model for their Neue Klasse models.
Tesla has integrated over 60 Chinese suppliers into its global supply chain, while European automaker Stellantis has taken a different route by forming a joint venture with China’s leading EV startup Leapmotor to tap into the budget-friendly EV market segment.
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