Summary of Key Points
The once-booming driving school industry is now facing a significant downturn: over 80% of training institutions are not profitable, with a capacity utilization rate of only 28.6% (meaning that out of 10 vehicles, only 3 are actually being used for teaching), and some small and medium-sized schools have closed down. The number of newly licensed drivers has decreased from 36.13 million in 2015 to 20.51 million in 2025, a reduction of 43%. Factors contributing to this include a decline in the population suitable for learning to drive, changes in young people's consumption patterns, and the popularity of alternative modes of transportation. The industry is trying to revive itself through intelligent transformation (such as using VR and AI in teaching) and by improving service experiences (e.g., providing one vehicle per student and free pick-up and drop-off services). In the coming years, we can expect a peak in closures, and market concentration will increase.
1. Decline in Student Demand: Saturated Middle-Aged Market, Shrinking Youth Population
The pool of potential students for driving schools is shrinking. In the past, middle-aged people made up a large proportion of learners—during the early days of automobile普及, people in their thirties and forties, even fifties, were obtaining driver's licenses. However, this segment of the population no longer has a strong demand for driving lessons; the remaining candidates are mainly high school students and college graduates who have just turned 18. The problem is that the birth rate of the "post-00s" generation (born after 2000) is only 163 million, significantly lower than the 200 million born in the "post-80s" and "post-90s" generations, leading to a continuous decrease in the number of young people eligible to learn to drive. For example, a coach in Guangzhou says that enrollment now relies mainly on 18-year-olds, but the number of applicants is dwindling, and driving schools across the country are facing this issue.
2. Young People "Escaping" from Driving Schools: No Desire to Buy Cars or Endure Poor Services
There are two main reasons why young people are avoiding driving schools:
1. Changing Consumption Patterns: Ride-hailing services and public transportation have become much more convenient, making owning and maintaining a car less attractive. For instance, Mr. Li in Guangzhou sold his SUV because he found it cheaper to use ride-hailing. Young people prefer to consume according to their needs and do not see the need to obtain a driver's license if they don't need a car.
2. Poor Traditional Learning Experiences: In the past, driving lessons involved waiting in long queues and dealing with unresponsive instructors. Today, young people have higher expectations for their learning experience and are willing to delay or give up on driving altogether. Cui Dongshu, Secretary-General of the China Association of Automobile Manufacturers, identifies this as the primary reason why young people are leaving driving schools.
3. A "Cold Winter" for the Industry: 80% of Institutions Losing Money, Instructors Switching to Ride-Hailing
Driving schools are struggling financially: out of the 21,000 training institutions nationwide, over 80% are not profitable, with a capacity utilization rate of just 28.6%. For example, in Jinan, only 4 out of 15 training vehicles are being used for teaching, while the rest are idle. Instructors are also affected; Master Liu from Shiyan, Hubei, used to teach over 300 students per year but had fewer than 50 in 2024 and eventually switched to driving a ride-hailing service in 2025. This trend of instructors changing careers is common in the industry.
4. Paths to Survival: Intelligent Transformation and Enhanced Services to Attract Young People
Driving schools are trying to reinvent themselves:
1. Intelligent Transformation: Leading companies like Dongfang Shifang use a combination of VR, AI, and real-road training, allowing students to practice driving in virtual environments before moving onto actual vehicles. This approach has proven successful, with Dongfang Shifang reporting a 17% reduction in net losses and an increase in gross profit margins in 2025.
2. Improving Service Experiences: Many schools offer personalized services such as one vehicle per student, free pick-up and drop-off, flexible class schedules (day and night), and free practice sessions. These practices are clearly advertised by schools like those in Panyu, Guangzhou. They also strictly manage their instructors to ensure a positive learning experience for students.
5. Future Trends: A Peak in Closures, with Larger Schools Emerging as Winners
Cui Dongshu predicts that 2026-2027 will see a peak in the closure of driving schools, and by 2030, supply and demand will balance out, potentially leading to a 25%-35% reduction in the industry's overall size. Small schools will be eliminated, while larger ones, with the funds to invest in intelligent technology and improved services, will become stronger. Market concentration will increase, meaning that only a few large schools will remain, making it difficult for smaller ones to survive.
In summary, the decline in driving schools is due to a combination of demographic changes, shifting consumer trends, and increased competition. While the new services (such as one vehicle per student and intelligent teaching) may make learning to drive more convenient for individuals, it poses greater challenges for school owners.