Most Companies in China's Auto Market Are Operating at a Loss

A large share of manufacturers in China's automotive industry are operating at a loss. According to Chery International President Zhang Guibing, approximately 90% of Chinese automakers are unable to generate profits. He noted that rising vehicle development costs could force many companies to exit the market.

The Global Automotive Outlook report published by AlixPartners in June 2026 also supports this assessment. According to the report, of the 30 Chinese companies producing new energy vehicles in 2025, only 3 ended the year with a profit. The remaining 27 recorded losses.

According to forecasts, only 7 of these manufacturers will be able to move out of losses and become profitable by 2030. Other weaker companies are expected to leave the market or become acquisition targets for larger manufacturers.

Chinese automakers are also turning to international markets to increase sales. However, expanding overseas sales has not yet translated into profitability for these companies.

One of the sector's main challenges is that production capacity exceeds demand. Although China produced approximately 35 million vehicles last year, its annual production capacity is estimated at nearly 55 million. As a result, some factories are operating below full capacity. Excess production capacity, rising costs and price competition are putting additional pressure on companies' financial performance.