Summary of Key Points
Over the past five years, the Chinese automotive market has witnessed a reversal in the landscape, with domestic brands making a comeback while joint-venture companies have retreated. In 2020, joint-venture brands held 61.6% of the market share; by the first half of 2026, this figure had dropped to 28.2%, and in June, it was as low as 24.5%. The main challenge for joint-venture brands is their inability to keep up with the pace of new energy transformation. Additionally, the traditional joint-venture model (where foreign parties provide technology and Chinese parties manage distribution channels) has become completely ineffective in the era of electrification and intelligence. Now, leading joint-venture automakers are taking self-help measures such as local research and development, rapid decision-making, and partnering with local supply chains, marking the beginning of a "new era of joint ventures"—moving from simply importing products to creating them locally.
Detailed Analysis
1. Joint-Venture Brands' Market Share Halved: From Dominants to Minor Players
What no one could have imagined three years ago has become a reality:
- Overall Data: In 2020, joint-venture and domestic brands had a 60-40 market share split; by the first half of 2026, domestic brands accounted for 71.8%, leaving joint-venture brands with only 28.2%. This means that for every 10 cars sold, only 3 are from joint-venture companies.
- Collective Decline: All major foreign brands have suffered significant setbacks: German brands (Volkswagen down 26%, Mercedes-Benz down 28%), Japanese brands (Honda down 34.7%, Toyota down 17.1%), American brands (Changan-Ford down 39%), and Korean brands (Beijing Hyundai down 5%). Even some companies that used to sell millions of cars annually now struggle to sell more than 50,000 units per month.
- Critical Threshold: The industry considers 25% as the "life-and-death line" for joint-venture automakers; below this threshold, issues with distribution channels, costs, and production capacity arise. In June, the market share of joint-venture brands dropped to 24.5%, indicating they are on the brink of crisis.
2. The Root of the Problem: Falling Short in the New Energy Race
Li Fenggang, General Manager of Beijing Hyundai, explained the situation:
- Fuel Vehicles Still Compete, but the Market is Changing: In 2020, fuel vehicles accounted for 94.3% of the market, with joint-venture brands holding 66% of that share; by 2025, fuel vehicles will account for only 46.1%, yet joint-venture brands will still hold 66% of the fuel vehicle market. This shows that their capabilities have not declined, but consumers are shifting to new energy vehicles.
- Significant Gap in New Energy Penetration: In June 2026, the penetration rate of new energy vehicles was 62.8% (6 out of every 10 new cars sold were electric), while joint-venture brands had only a 11.9% penetration rate compared to 81.8% for domestic brands. Simply put, when consumers want to buy electric cars, joint-venture brands cannot offer competitive products.
3. Why the Old Joint-Venture Model Is No Longer Effective? The Old Formula Has Expired
Wang Qian from Dongfeng-Nissan pointed out the core issue: The traditional model of "foreign parties providing technology and Chinese parties managing distribution channels, with costs traded for scale" has been undermined by the new energy market:
- Slow Research and Development: Domestic automakers can update their technology every two years, while joint-venture companies have to wait for decisions from global headquarters, resulting in long decision-making cycles. For example, if consumers want intelligent infotainment systems or autonomous driving features, joint-venture products may take three years to be released, by which time domestic brands have already made several iterations.
- Non-Local Supply Chains: Most joint-venture companies rely on overseas parts; even if they produce in China, they do not collaborate with local suppliers. This leads to higher costs and slower responses. For instance, while domestic brands use batteries from CATL, joint-venture companies may still import them from abroad, resulting in higher prices and lagging behind technological advancements.
- Failing to Meet Consumer Demands: Consumers now prefer vehicles that are intelligent, personalized, and cost-effective. Joint-venture models often do not fit Chinese consumer preferences (e.g., poor navigation systems or slow voice assistants), whereas domestic brands can adapt quickly.
4. Self-Help Measures: Localization as the Key to Survival
Joint-venture automakers are not sitting idly by; they are starting to delegate more power to their Chinese teams:
- Dongfeng-Nissan's GLOCAL Model: The Chinese team makes decisions directly, develops core technologies, and aligns product schedules with the Chinese market. They launched three new energy vehicles within half a year, increasing the share of new energy vehicles from 6.6% to 30%, and the N series sold 100,000 units—making them the fastest-moving joint-venture company among state-owned enterprises.
- Beijing Hyundai's Local Research and Development: They have established a 1,500-person R&D team focused on electrification and intelligence, collaborating with CATL for batteries and Hummo Intelligence for autonomous driving. Their first new vehicle, the IONIQ V, was launched in September.
- Maintaining Core Values: Despite the transformation, some principles remain unchanged: safety, reliability, international quality, and not treating consumers as test subjects—these are strengths that joint-venture brands have built over time.
5. The New Era of Joint Ventures: From Importing to Locally Producing for Global Sales
Liu Yan, Deputy Secretary-General of the China Association of Automobile Manufacturers, calls this the "new era of joint ventures." The key changes include:
- Shift in Role: Joint-venture companies are no longer just transferors of technology; they are becoming local creators. For example, models developed by Chinese teams are sold not only in China but also globally (from "Made in China" to "Global Vehicles").
- Transformation Pathways: Roland Berger recommends five strategies: localized technology, complementary resources from both China and abroad, multi-tiered brands (covering all price segments), innovative distribution channels (combining online and offline sales), and global collaboration (using Chinese experience to benefit the world).
- Future Opportunities: Wang Qian believes that the "window is not closed; it has just been replaced by a new door." The Chinese market is large enough, and as long as joint-venture companies are willing to restructure their foundations (quality control, supply chain resilience) according to new principles, they can survive.
In One Sentence
The "golden age" of joint-venture cars has passed, but the "new era of joint ventures" has just begun. Whether they can thrive depends on whether they can let go of their arrogance and treat the Chinese market as their home ground. To consumers, it doesn't matter if a company is joint-venture or domestic; what matters is whether the products are useful and the prices are reasonable.