Summary of Key Points
In 2026, sales in the Chinese automotive market declined, with joint-venture brands experiencing a significant shrinkage in market share (German brands losing nearly half their share, while Japanese and American brands also saw substantial declines). The traditional model of importing overseas models for production in China and leveraging brand premiumization has become completely ineffective in the era of smart electric vehicles. Joint-venture automakers have diverged into four possible paths: complete withdrawal from the market, shifting to export bases, operating with a reduced asset footprint, or renewing contracts while delegating more decision-making power to Chinese teams. Delegating authority to Chinese teams can be a自救 strategy for some companies, but its effectiveness depends on several critical factors—including the health of their distribution channels, cost structures, support from headquarters, and the capabilities of Chinese shareholders. Early delegation may lead to survival; delayed action may only result in attempting to clean up the mess left behind. Moreover, delegating authority is just a starting point; sustained operation requires multi-dimensional collaboration.
Why the Old Joint-Venture Model No Longer Works
In the past, joint-venture automakers made easy profits by determining vehicle models overseas and selling them in China with a premium price tag. However, this approach no longer works in the smart electric vehicle era:
1. User demands are outpacing offerings: Overseas headquarters decide on vehicle features (such as whether to include smart infotainment systems or extended-range hybrid technologies), leaving Chinese teams with limited room for modification. Chinese consumers' demand for advanced features is much faster than that of their overseas counterparts, causing new joint-venture models to fall behind as soon as they are released (for example, while others use 8155 chips, joint-venture cars may still use older ones).
2. Price advantage is gone: Previously, joint-venture cars could command higher prices due to the brand reputation, but now domestic electric vehicles have priced in the 100,000–200,000 RMB range, making it unprofitable for joint-venture models to lower their prices. For instance, Jaguar Land Rover's domestically produced models have resulted in an average annual loss of 30,000 RMB per unit, which dealers cannot afford.
3. Distribution channels are turning against them: Joint-ventures rely on dealers to sell cars, but high inventory levels and forced sales pressure have led to dealer bankruptcies, affecting customers. For example, after purchasing a Chevrolet in Lanzhou, customers may find no service outlets available, and when the car requires an OTA update, they must pay out of pocket for replacement parts costing 7,000 RMB.
Joint-Venture Automakers' Different Paths to Exit the Market
The exit from the market is not a simple matter of closing down; instead, there are several approaches:
1. Complete withdrawal: Brands like Suzuki, Acura, Mitsubishi, Jeep, and Skoda have already left the Chinese new car market. Chevrolet sold only 36 units in the first half of the year, indicating its market presence is also on the decline.
2. Shifting to export bases: Kia is a typical example; in May this year, it sold just over 6,000 cars domestically but exported 16,000 (73% of total sales), with its Chinese factory becoming more of a global production hub rather than a focus for the local market.
3. Operating with reduced assets: Jaguar Land Rover has stopped producing fuel-powered cars in China and collaborated with Chery to launch the “Spirit Rider” brand, where foreign parties provide the brand and design while Chinese teams manage the supply chain and智能化 efforts—essentially, they are “licensing the brand to generate some revenue without dealing with the complexities of production and sales.”
4. Renewing contracts and delegating authority: Companies like SAIC Volkswagen (contract renewed until 2040) and GAC Honda (until 2038) have chosen to stay, handing over product development decisions to Chinese teams. For instance, SAIC-GM’s “Xiaoyao Architecture” has been developed in China, resulting in shorter development cycles and reduced costs, leading to seven consecutive quarters of profitability.
Can Delegating Authority to Chinese Teams Save Joint-Venture Automakers?
Delegating authority is not just about saying the right words; it depends on concrete actions. Can Chinese teams effectively determine vehicle models, select suppliers, and shorten development times?
- Successful examples: SAIC Volkswagen now releases new cars monthly, with the ID.ERA series being developed in China to target the mainstream新能源 market. GAC Honda has implemented a “Product Director” system, allowing local teams to lead vehicle design. These companies did not reach a critical point of decline before delegating authority, so they are seeing positive results.
- Unsuccessful examples: Jaguar Land Rover delayed delegating authority too late; its distribution channels were already in disarray, and its price structure collapsed (the XEL model’s price dropped from 300,000 to 150,000 RMB, significantly reducing its resale value). Customers lost trust in the brand, making it difficult to sell even with further authority delegation. Ford’s “Spirit Rider” attempt to appeal to Chinese consumers failed; by abandoning its rugged off-road characteristics and competing with domestic SUVs, it only sold 17 units in July.
The critical window: The best time to delegate authority is when distribution channels are still functioning, the brand retains its premium value, and headquarters are willing to invest in new platforms. Delaying action turns delegating authority into a mere formality, leaving Chinese teams to clean up the mess.
Why Does Delegating Authority Sometimes Fail?
Delegating authority is only effective if four key conditions are met:
1. Distribution channels remain viable: If dealers withdraw, even excellent cars cannot be sold. For example, with the closure of Infiniti dealers in Chongqing, customers must travel to Chengdu for maintenance, effectively erasing the brand’s presence locally.
2. Costs can be reduced: If joint-venture cars cannot compete on cost levels with domestic models, lowering prices will lead to losses; otherwise, no one will buy them.
3. Headquarters provide support: If global headquarters only offer old platforms for modification without new technologies (such as electric vehicle platforms), delegating authority is meaningless.
4. Chinese shareholders have the capabilities: Chinese partners (like SAIC and GAC) must possess the technical and supply chain resources to fully leverage the delegated authority; otherwise, it will be futile.
Final Conclusion
By handing over product development decisions to Chinese teams and meeting the four conditions mentioned above, joint-venture automakers may survive. Otherwise, they will face inevitable withdrawal from the market. The golden age of joint-venture brands is behind us. The key to survival now lies in whether they can lower their stance and truly empower Chinese teams, as well as in their ability to quickly adjust costs, distribution networks, and technologies.