The flames of competition in the automotive industry are growing fiercer.

Xiaomi and Huawei, who have crossed over into this field, have secured prominent positions at the Guangzhou Auto Show, sprinting towards the "million-yuan luxury car" market. BYD, Li Auto, and Thalys have all delivered profitable third-quarter reports.

However, on the other side of this fervor, the "Hunger Games" of the automotive industry has also begun.

From WM Motor last year to HiPhi, Hozon Auto, and SAILING Automobile this year, as well as NIO, which is on the "brink of survival," the elimination round in the new energy vehicle market is intensifying.

Established automakers such as Geely, FAW, and GAC are also starting to collectively "slim down" to survive.

01 Geely, FAW, and GAC take the initiative to "slim down," and the wave of consolidation in the automotive industry has arrived

Geely has conducted at least three consolidations within two months, which can be considered the most intense in terms of both breadth and depth.

On November 14, to "eliminate intra-industry competition," Geely announced the optimization of the equity structure of ZEEKR and Lynk & Co, merging these two proactive new energy vehicle brands.

Additionally, on October 9, Geely announced the official integration of the Geometry brand into the Geely YH series, which was upgraded to an independent brand; on November 12, Geely's new energy pickup truck brand Radar Auto announced its integration into the Geely Automobile Group; it is rumored that Geely will also continue to promote the integration of Yizhen Auto and Geely YH.

Known for its "blessing of many children," Geely has numerous brands under its umbrella, including Geely YH, ZEEKR, Proton, Lotus, Volvo, Polestar, Xingma, Radar Auto, and more.

In September of this year, Geely released the "Taizhou Declaration," the core of which is to advance deep integration and efficient fusion of internal resources through strategic focus and integration, clarify the positioning of each brand, straighten out equity relationships, reduce conflicts of interest and duplicate investments, and improve resource utilization efficiency.

Just a few days before the merger of ZEEKR and Lynk & Co, SAIC announced the official merger of the Roewe and Feifan brands, with Feifan Automobile returning to SAIC after three years of independent operation.

Three years ago, Feifan embarked on independence with the mission of breaking into the mid-to-high-end new energy vehicle market. However, after independence, Feifan's performance in the high-end market was unsatisfactory. Facing internal competition with the IM brand and external sluggish sales, coupled with consumer rights protection issues, Feifan was eventually forced to lay off employees and reduce salaries.

It is reported that the Roewe-Feifan channel layer is already accelerating its integration, with 35 Roewe stores and 12 Feifan stores already consolidated into Roewe-Feifan dealerships, and it is expected that 100 dealerships will complete their integration by the end of this year.

In addition to SAIC and Geely taking swift action, in October, Great Wall Motor announced that all services related to its Ora APP will be migrated to the Great Wall APP.

Ora is a major electric vehicle brand under Great Wall that targets female consumers. It is rumored that due to poor sales performance, Ora may be integrated into the Great Wall Haval brand. The current channel consolidation serves as a signal.

Although GAC has not conducted any brand mergers, it has shifted its approach to autonomous brands from "strategic management and control" to "operational management and control," transitioning from focusing on high-level decision-making and long-term strategies to a greater focus on market dynamics and operational efficiency.

This means that GAC will be more involved in the daily operational management of its autonomous brands. The most direct manifestation of this is that GAC has already begun reforming its organizational structure.

For example, previously, GAC Trumpchi and GAC Aion were two distinct organizations, with independent procurement and other functional departments, leading to inefficiencies and excessive costs. This reform aims to "simplify complex processes."

Feng Xingya, general manager of GAC Group, stated that by January 1, 2025, GAC will complete a comprehensive reform, with various functional departments being merged or separated based on actual conditions. While ensuring the relatively independent operation of Aion, the company will merge organizations and streamline processes to improve efficiency and reduce costs.

It can be said that since the second half of the year, established automakers have taken the lead in transforming to survive, and they are all in a hurry.

02 The "Hunger Games" of new energy vehicles have officially begun

Previously, an image collection of new energy vehicle logos circulated widely, with 90% of the brands in the image unrecognized. At that time, the public was aware that China did not need so many new energy vehicle brands, and that there would inevitably be a shakeout, but no one expected the "kill or be killed" scenario to unfold so quickly.

Price wars are the signal for the start of the "Hunger Games" among new energy vehicle manufacturers.

Since the beginning of this year, BYD has promoted the slogan "electricity is cheaper than oil," driving down the prices of plug-in hybrid models to below 80,000 yuan.

Soon after, multiple automakers such as SAIC-GM-Wuling, Geely, Changan, and NIO followed suit with significant price reductions. For example, the price of the Wuling Starlight 150km Advanced Plug-in Sedan, which was priced at 105,800 yuan when it was launched in December of last year, was adjusted to 99,800 yuan due to BYD's price adjustments.

The "new forces" NIO and XPeng not only introduced more affordable models but also reduced the prices of multiple models.

At the recent Guangzhou Auto Show, the new ARCFOX Alpha T5 was launched with a guide price range of 155,800 to 199,800 yuan, the same as the old model, but the terminal retail price was 123,800 to 167,800 yuan, 32,000 yuan cheaper than the guide price.

Amid the price wars, the price of individual vehicles has continued to decline. According to relevant data from the automotive analysis agency JL Road, as of the end of the third quarter of 2024, the average transaction price of a single vehicle in China's entire market was 172,000 yuan, returning to the level of the first quarter of 2020.

The profit per vehicle is also decreasing. According to the National Bureau of Statistics' calculations of economic indicators per vehicle, the profit per vehicle in the domestic automotive supply chain had dropped to 16,000 yuan in the first nine months of this year, with only 11,000 yuan in September, setting a new low. Meanwhile, the cost per vehicle has been increasing in recent years, reaching 299,000 yuan, the highest level in seven years.

This is reflected in the financial reports, where leading automakers that have gone public are feeling the pressure.

In its latest third-quarter report, SAIC Group reported revenue of 145.796 billion yuan, a year-on-year decrease of 25.91%; net profit attributable to shareholders was 280 million yuan, a year-on-year decrease of 93.53%.

GAC Group reported third-quarter revenue of 28.49 billion yuan, a year-on-year decrease of 21.46%, marking the third consecutive quarter of decline; net loss was 1.396 billion yuan, recording the largest single-quarter loss since its listing in 2010.

Changan Automobile reported third-quarter revenue of 34.237 billion yuan, a year-on-year decrease of 19.85%; net profit attributable to shareholders of the listed company was 748 million yuan, a year-on-year decrease of 66.44%.

GEELY's ZEEKR reported third-quarter revenue of 18.358 billion yuan, a year-on-year increase of 30.7% but a quarter-on-quarter decrease of 8.4%; net loss for the third quarter was 1.139 billion yuan, a narrowing compared to the same period last year but still in a loss state.

According to data from the China Passenger Car Association (CPCA), in the first three quarters, the total revenue of the automotive industry was 7.3 trillion yuan, a year-on-year increase of 3%, while total profit was 336 billion yuan, a year-on-year decrease of 1.2%, with an overall industry profit margin of only 4.6%, far below the industrial average of 6.1%.

In other words, while the overall industry is growing, many automakers are not making money.

As competition in the automotive industry intensifies and survival conditions become increasingly harsh, the industry's elimination round is bound to accelerate. Xiaopeng Motors CEO He Xiaopeng stated in a recent third-quarter earnings call that the years 2025-2027 will be the elimination round for the Chinese automotive industry.

03 Who will survive the "Hunger Games"?

When the elimination round has become an established fact, what will the final outcome of the industry be?

Yu Chengdong, Executive Director of Huawei and CEO of the Intelligent Automobile Solution BU, and Lei Jun, founder of Xiaomi Group, have both made predictions that only four or five companies may remain in the future.

Yu Chengdong stated last year that by 2030, the number of major players in China is expected to be fewer than five. Lei Jun stated that when the electric vehicle industry matures, the world's top five brands will occupy more than 80% of the market share.

So who are the potential final four or five?

Based on October's new energy vehicle retail sales data, according to the Passenger Car Association, BYD is far ahead with sales exceeding 400,000 units and a market share of 36.1%. Geely, SAIC-GM-Wuling, and Changan Automobile are trailing BYD but have market shares of over 5%. Li Auto, NIO, and Thalys are the top three among the new forces.

Source: Passenger Car Association

In addition, according to official disclosures, Xpeng, NIO, and Xiaomi all surpassed sales of 20,000 units in October, giving them a certain lead among new carmakers.

Among the "second-generation innovators" of traditional automakers, GAC Aion, ZEEKR, and Blue Ocean Automobile all surpassed sales of 20,000 units in October. ARCFOX, VOYAH, AVATR, and IM Motors surpassed sales of 10,000 units in October, reaching a relatively high level in the past two years.

NIO sold 6,020 units in October, a year-on-year decrease of 40.32%, while Jiyue sold only over 3,000 units, putting them in an awkward position.

Jishi Automobile and Skyworth Automobile have average monthly sales of less than 1,000 units in China, with minimal presence. Hozon Auto and SAILING Automobile are currently being hotly discussed due to wage arrears and staff turnover, struggling on the "life-or-death line" and on the path to bankruptcy reorganization, similar to HiPhi and ENNOVATE.

Besides BYD's leading advantage, it is still uncertain which of these players will survive until the end. After all, statistics show that in just five years, more than 400 domestic new energy vehicle companies have disappeared, falling from 438 in 2018 to just over 40 in 2023.

To become one of the survivors among these 40-plus companies, manufacturers are using every means possible, from competing on price and technology to marketing and overseas expansion.

On the technological front, manufacturers are competing in intelligent driving, with Xiaomi, Huawei, Li Auto, Xpeng, and others all set to release intelligent driving systems by the end of this year.

Xiaomi recently announced that it will continue to increase its R&D investment in intelligent driving next year, with the principle of "no upper limit." Xpeng is also competing in AI high-level intelligent driving. Li Xiaopeng recently stated at an earnings call that the penetration rate of new energy vehicles in China will inevitably rise to over 85%, and the transformation of AI will drive the next phase of consolidation in the overall market share.

On the marketing front, Lei Jun has become an internet celebrity and a new top streamer by filming Vlogs and live streaming to sell cars, surpassing Dong Yuhui in the number of followers on Douyin.

Under Lei Jun's leadership, a host of automotive industry leaders, including Li Bin, CEO of NIO, Wei Jianjun, Chairman of Great Wall Motor, and Zhang Yong, CEO of NIO, have all entered the live streaming arena.

On the overseas expansion front, automakers are no longer content with just exporting complete vehicles but have begun to establish factories overseas, aiming to relocate the entire supply chain.

As automakers "compete to the death," new forces tend to be more flexible and adaptable, quickly responding to market changes. For established automakers like Geely, SAIC, and FAW to stabilize the situation, comprehensive layout and continuous innovation are essential.

If established automakers lack the determination and speed for transformation, they may quickly fall behind in the intensifying internal competition. When that happens, it won't just be unknown newcomers that fall; established automakers may also be at risk.