Experts predict tough future for Chinese car brands like Nio, Xpeng and Li Auto. Mergers are the only way forward in competition with giants like BYD, they say
The future looks uncertain for many Chinese car brands. Analysts predict a significant consolidation in China's car market.
Only a few strong players are expected to survive. Brands such as Nio, Xpeng and Li Auto are mentioned as some of the brands that could have a hard time. Especially in the competition against the giant BYD.
Some experts believe that mergers are necessary for the survival of smaller producers.
One expert, Yiran, goes so far as to predict that only ten car brands will survive in the future, creating great uncertainty for the many current brands on the Chinese market.
This is reported by Newsqq .
The pressure on smaller producers is already evident. Nine recently experienced major financial difficulties.
The company had to raise around 3.38 billion Danish kroner in new capital. This came after a loss of around 5.85 billion Danish kroner in the last quarter of 2023.
This situation illustrates the challenges facing smaller Chinese automakers. It is difficult to say exactly what Nio could have done differently to avoid this negative development.
Three professors recently participated in a panel discussion in China. They discussed how smaller car brands could have acted differently. They pointed to the need for strategic changes.
The fight for survival and BYD's dominance
Li Yanwei from the China Automobile Dealers Association participated in the debate. He believes that the market is simply too crowded. There are too many car brands today.
"I don't think there are that many companies that will be able to survive," said Li Yanwei.
He particularly pointed to the major competitor BYD, which he called "the elephant in the room".
BYD's strong position makes it difficult for smaller players.
– Therefore, I don't think other small companies will have much value in their existence in the market, Yanwei added.
Another participant was Zhu Xican, a professor at Tongji University. He has a clear view on what it takes to survive in the long term.
According to him, a Chinese automaker must deliver at least 2 million cars annually.
Professor Zhu Xican proposes a concrete solution for Xpeng, Nio, and Li Auto. He believes they should team up to have a chance at survival.
Mergers and the future of the Chinese car market
– They (the car brands, ed.) must come together, restructure and cooperate as quickly as possible, explains Zhu Xican.
He believes this is the only way forward for smaller brands.
The professor also criticizes Xpeng and Nio's current strategies. He believes they are focusing on the wrong things and making big mistakes. A collaboration could have changed their fate, according to the professor.
Overall, experts paint a picture of a Chinese car market undergoing major change. Competition is intense, and only the strongest or most adaptable are expected to survive.
Mergers and acquisitions are likely to dominate the industry in the coming years. The future of many of the current Chinese car brands remains uncertain. Smaller players will have to find new ways to ensure their existence.
At Boosted.dk you can read more about the development within electric cars and the different car brands. Mergers may already be on the way at one of the car brands that will be coming to Denmark in the near future. Read more about it here .
