Introduction

How can joint ventures navigate their current predicament? This lingering question from last year seems to have answers emanating solely from within their ranks.

The frenetic pace of China's auto market in 2024 is unmistakable.

Amidst the rapid market shifts, a clear demarcation between the old and new eras has emerged. As BYD and Geely dominate the market, while HiPhi and Geely's EV brand Jiyue falter, tech giants like Xiaomi and Huawei have entered from diverse industries, wielding the banner of the new forces.

This suggests that once-dominant joint ventures now face a development bottleneck. With the intensifying industry transformation and formidable competitors, mere "survival" has become a luxury.

Even mainstream players like Volkswagen Group China and Toyota Motor China must endure immense pressure to preserve their dignity. SAIC-GM neglected sales and profits throughout the year, hoping only to sustain a spark of life for the cash cow Buick GL8. Joint ventures like Beijing Hyundai, Yueda Kia, and Dongfeng Peugeot Citroen Automobile, which suffered market setbacks years ago, continue to seek a way out amidst confusion...

Looking back, the stories of joint ventures are filled with tragedy and desolation.

Are joint ventures truly powerless? Can their two decades of market competition experience not help them return to the main track? Perhaps this is the question on everyone's mind as we usher in the new year.

"Abandon your fantasies and prepare for battle." Today, these eight words carry profound significance. Given the current vitality of China's auto market and consumers' attitudes towards joint ventures, what ideological baggage is worth clinging to?

Abandon obsession. Joint venture auto companies should not cling to their unyielding pride. Faced with the stark choice between life and death, they must fully embrace a Chinese hue.

In the eyes of onlookers, this anti-globalization move is not a strategic plan targeting a specific region. In the dynamic and evolving industry, having a voice in China's new energy market has become a shortcut for any joint venture to support its foreign partner.

If they grasp this principle, as we move from 2024 into a new round of market competition, joint venture auto companies should know the path forward. As Chinese automobiles cease being mere background players, it's time for joint ventures to find their own positioning.

Awaiting doom is not the path for joint ventures.

Yu Hua once said, "When we confront the world fiercely, the world suddenly becomes gentle and refined." This aptly describes Chinese auto companies over the past year, each with a bayonet hanging from their waist. No matter how fierce the competition, they, accustomed to licking blood off the blade, fear no battle. Under this onslaught, joint venture auto companies that once stood in the way of progress have suddenly become docile.

Indeed, under this near-frantic offensive, where do cautious joint ventures find the confidence to fight back?

Many argue that preserving the fuel vehicle business is the burden preventing them from breaking through the development bottleneck. But with the slogan "electricity is cheaper than oil" resonating across China's auto market, the notion of wanting the best of both worlds simply won't work.

Last year, with the advancement of electrification, few strategic plans related to joint ventures were implemented, further indicating that due to the competitive landscape, joint ventures urgently need more decisive measures.

However, before that, we must admit that consolidating the fuel vehicle base or promoting electric vehicles through price wars remains their unified self-preservation plan.

Recall that the ninth-generation Camry, the all-new Magotan/Passat, the Tiguan L Pro, and the all-new Santa Fe, launched in 2024 as joint venture new cars, were all fuel vehicles, despite being significant products for their respective brands.

It's evident that on the path to transformation, no joint venture is willing to abandon their inherent customer base. But, on the other hand, it's the continuous emergence of these new cars that makes the outside world feel: hey, joint ventures have exhausted their resources.

Reality is harsh. Don't joint ventures realize that the current situation is dominated by new energy vehicles?

Throughout last year, it's true that the monthly market penetration rate of new energy vehicles frequently exceeded 50%, but it also constantly reminds us that for the remaining 40% plus market share, joint ventures won't give up easily. The launch of numerous new fuel vehicles implicitly suggests that while Chinese brands court younger consumers, joint ventures are striving to retain traditional users.

In 2024, although joint ventures' seemingly powerless measures were filled with anxiety and unease about the future, it didn't prevent them from holding onto their inherent market.

Perhaps they understand well that in turbulent times, the importance of defense needs no explanation. Despite the siege by Chinese brands, it's become normal for new cars to be launched at discounted prices, and dealers switching or withdrawing from networks are endless. This is the helplessness of being in the eye of the storm.

Image: SAIC Volkswagen completed its joint venture renewal in November 2024.

Certainly, after experiencing the initial shock from the stagnation of pure electric products upon launch, there's no reason for joint ventures not to seriously consider their next steps.

Sticking to the fuel vehicle market can deepen joint ventures' roots. But watching the new energy vehicle market enter an era of affordable, high-quality products driven by price wars, simply relying on price reductions to promote electric vehicles won't solve the fundamental problem.

Just like the lack of interest in the ID. series, is the underlying reason really just the high price?

On the eve of last year's Guangzhou Auto Show, Mazda EZ-6 was officially launched. And on the day of the auto show, a new generation of joint venture electric vehicles such as GAC Toyota's Boshi 3X, FAW Toyota's bZ3C, Dongfeng Nissan's N7, and GAC Honda's P7 debuted in mass production status.

The unveiling of these products indicates that while joint ventures haven't given up on the electric vehicle market, the momentum of viewing China's auto market from a global perspective has indeed weakened. Behind this shift, the attitude of re-examining the Chinese market and making development decisions is highly prominent.

Today, regardless of the market shocks joint venture brands have faced over the past year, ultimately, for joint ventures to retain strength in China, sticking to old paths or entering the new energy vehicle market with slogans isn't in line with the times.

Facing a new round of competition, set aside arrogance and prejudice, and focus your perspective on China. Don't stubbornly believe that brand premium can be an advantage. When appropriate, please hand over product definition rights to the Chinese market or seek a way out with the help of Chinese technology companies. There is no other way.

Setting aside pride isn't weakness; it's a new beginning.

"In the past, it was because I didn't have money to buy domestic cars, and now it's still because I don't have money to buy domestic cars." If you understand the underlying meaning, you'll know that these similar words encapsulate the market core of two eras.

With major groups announcing their sales data, the glaring downward trend of joint venture sales by as much as 30% or even higher is evident. Anyone can see that if no changes are made, this unprecedented shockwave won't weaken this year.

Previously, some of us would say, "Don't underestimate joint ventures," expecting them to survive this auto market winter after bolstering their strength. Nowadays, driven by market trends, regardless of whether joint ventures heed outside voices, reality is stimulating them profoundly.

Fortunately, the changes over the past year have more or less driven major joint venture enterprises to take practical measures. As Chinese automobiles deeply influence the global auto market, even the most stubborn and arrogant enterprises have realized that the offensive launched by Chinese auto companies against the entire automotive industry isn't just talk.

Since they've personally experienced the pain brought by the sudden market shift and encountered too many formidable opponents, the various market changes won't be isolated incidents.

Last year, the emergency suspension of SAIC Volkswagen's ID.7S project and Toyota bZ4X's unsuitability for the local market served as warnings, but their real intention was to teach all resistant joint ventures to bow their heads.

Mazda understands this, and Toyota does too. The Chinese lineage flowing through EZ-6 and Boshi 3X may be what Chinese users need most in this era.

Conversely, with the lesson of predecessors in mind, it's unclear what Volkswagen (Anhui) aims to achieve with products like the ID. series. Besides being hard-hit by the market, all that seems to be left is so-called self-esteem.

For a long time, brand premium has been viewed by joint venture auto companies as a chip to attract consumers. But after the market baptism of these two years, don't you understand? The perception that "under the same product strength, the Volkswagen logo is still worth 50,000 yuan" should have been swept into the dustbin of history long ago.

In the terminal market, there's the European pure-electric vehicle SAIC Volkswagen ID.3, which can barely snatch a piece of the pie from BYD Dolphin with a price of just over 100,000 yuan. There are also BMW i3, Mercedes-Benz EQ series, electric MINI, etc., which maintain their presence through continuous price reductions.

Obviously, these examples illustrate one thing: For joint ventures, if they want to stay in China's new energy market, besides accelerating innovation, they must also set aside their pride and abandon the useless obsession with brands.

Not long ago, it was rumored online that the pre-sale price of GAC Toyota's Boshi 3X would be just over 100,000 yuan. Regardless of whether this information is true, based on the current pricing strategy of new energy vehicles, this electric SUV with the Toyota logo will only have an official price comparable to Chinese electric vehicles of the same class. If possible, with pioneers like Kia EV5 and Buick E5 ahead, it may even have to be slightly lower.

Hey, the times have truly changed!

Joint venture auto companies never expected that the scenario of "thirty years east, thirty years west" would come in 2024. With this signal, as the most anticipated joint venture localized electric products in the industry for 2025, GAC Honda P7, Dongfeng Honda Ye S7, and Dongfeng Nissan N7 should know the path forward, right?

"For the quality of electric vehicles, the evaluation criteria in the eyes of Chinese consumers seem to be only the price."

Since the price war broke out, many have had this thought. But it must be said that the survival rules of the new energy vehicle market don't solely rely on low prices. This points out that joint venture brands deciding to join the price war mustn't fall into the misconception that "low prices can control the market".

Lowering one's profile and abandoning brand premium will only be the first step.

Image: GAC Honda's new energy factory was completed and put into operation.

In the coming year, integrating the experience accumulated in research, production, and sales into the ecosystem of subsequent new energy vehicles, continuously ensuring the brand stickiness of existing users, and fully integrating Chinese enterprises like Huawei and Baidu, which hold the core advantage of "intelligence," into strategic partners when necessary, are all key measures that cannot be overlooked by every joint venture auto company.

Actually, the industry has long given too many similar assumptions about the survival of joint venture auto companies in the future. The reason why market movements in 2024 didn't revolve around joint venture transformations, some would argue, is that the heavy blow of the market wasn't enough to make them feel the breath of death.

However, despite the sluggish growth of electric vehicles due to the surge in popularity of green-plate hybrid vehicles, China's new energy vehicle sector remains highly unpredictable. As market share gradually erodes and domestic automakers increasingly challenge them in the international arena, even industry titans such as Honda and Nissan are now contemplating reorganization and potential mergers. Where, then, does this leave the maneuvering space for joint venture auto companies in China?

2025 is poised to be another year marked by intense internal competition. Joint ventures are thus faced with a critical decision: do they prioritize preserving their reputation or ensuring their survival? They must choose wisely here.