As overall industry profit margins hit rock bottom, even dropping to 1.4% in September alone, a counterintuitive question arises: If building cars is less profitable than keeping money in the bank or investing in robust (stable) financial products, why are hundreds of automakers still in the game, with new brands continuously entering the fray?

The fundamental reason is that building cars has never been a short-term dividend-seeking 'financial game,' but rather an 'infinite war' betting on future trillion-dollar smart terminal entry points, where survival depends on scale. For automakers, halting operations means research and development, supply chain, and channel costs will instantly devour cash reserves. Only by continuously building cars and maintaining sales volume and cash flow can they stay in the game and wait for the profit inflection point to arrive.

Minimal Profits at the Top, Huge Losses at the Bottom: Who's Taking the Profits?

The industry's 'some celebrate, others mourn' dynamic is essentially a brutal stratification based on scale barriers and supply chain influence.

Data from the first half of 2026 shows Geely Auto leading the announced automakers with a 5.2% profit margin and a per-vehicle profit of RMB 6,389. Great Wall Motor has a 2.4% profit margin and a per-vehicle profit of RMB 4,281. BYD's first-quarter profit margin was 2.7%, with a per-vehicle profit of RMB 5,770.

However, Changan Auto's profit margin is only about 0.6% to 0.8%, with a per-vehicle profit of just RMB 619 to RMB 811. Leapmotor's profit margin is 0.55%, with a per-vehicle profit of only RMB 589. Besides these automakers, many other brands are operating at a loss.

Even more disheartening is that CATL boasts a profit margin as high as 15.6%. The profit from installing one battery pack exceeds what most automakers earn from selling an entire vehicle. Automakers lacking scale advantages cannot amortize R&D and manufacturing costs and are forced to follow price wars, naturally becoming the main contributors to the industry's overall declining profit margins.

The Elimination Race is Far from Over: Who Will Still Be at the Table in 2030?

Such meager profits mean the industry reshuffle has not only begun but is accelerating. In recent years, 23 new energy brands, including WM Motor, HiPhi, Zeekr, Neta, and GAC Aion, have collapsed. Six foreign brands—Skoda, Renault, Jeep, Acura, and Mitsubishi—have also exited China.

Regarding the landscape in 2030, industry consensus is high: Changan Auto Vice President Yang Dayong predicts that the Chinese market will eliminate about 100 brands in the coming years, with only around 20 surviving.

Consulting firm AlixPartners offers an even harsher estimate: among China's 129 battery electric and plug-in hybrid brands, only about 15 automaker groups will monopolize most industry profits, with nearly 90% of brands being eliminated or mired in persistent losses.

Companies focusing on mid-to-low-end models will need annual sales of 5 million units to survive, while 3 million units annually is merely the entry ticket for in-house development of advanced intelligent driving systems. Brands lacking core technologies, economies of scale, and global Layout (footprint) will inevitably be acquired or exit the market.

When Will the Profit Inflection Point Arrive: A Faint Glimmer Around 2027

Industry profit recovery will not happen overnight, but signs of an inflection point are emerging.

Cui Dongshu of the China Passenger Car Association judges that, barring unexpected policy or market changes, as cost pressures ease and automakers continue to launch more competitive products, the Chinese auto market is expected to gradually stabilize by 2027, with full-year retail growth estimated between 0% and 5%.

Institutions like Morningstar also predict that as economies of scale kick in and battery costs decline, the profitability of new energy automakers will improve between 2026 and 2028, with gross margins expected to rise by about 5 percentage points on average by 2027 compared to 2024.

However, J.P. Morgan warns that 2027 could become a 'worst-case benchmark year,' with factors such as stagnant domestic demand and reduced export tax rebates still suppressing profitability.

True profit improvement depends on the speed of the elimination race and the realization of scale effects by leading companies, rather than waiting for a natural industry recovery.

Can Exports Plug the Profit Gap: High-Share Samples in Central Asia and Nepal

Against a backdrop of razor-thin domestic profits, overseas markets are becoming a critical growth area for some automakers to offset losses and even achieve profitability.

In the first half of 2026, China exported 5.096 million vehicles, up 65.3% year-on-year, with new energy exports surging 1.6-fold. Export growth far outpaced domestic growth.

In Uzbekistan, Chinese brands captured a combined 19.8% market share in September, with BYD ranking second among brands at 13.4% (4,558 units), while Li Auto and JETOUR entered the top ten brands for the first time that month.

In Nepal, Chinese automakers like BYD, Changan, and Wuling wield strong 'presence' through technological and price advantages, with Dongfeng Import & Export ranking second among local Chinese passenger car brands.

While these markets have limited absolute scale, per-vehicle gross margins and competition intensity often surpass those in China. For brands under domestic sales pressure, exports are not just a channel to absorb excess capacity but a lifeline to secure high margins in niche markets and support domestic R&D and operations.

Low domestic profits are the price of the elimination race, while global capabilities will determine who survives to see profit recovery.