The Chinese automotive landscape is undergoing a profound transformation, with traditional joint venture brands losing significant ground to domestic manufacturers and new energy vehicle (NEV) startups.
Data from the first half of the year paints a stark picture of this realignment. The wholesale sales of passenger vehicles totaled 12.547 million units, a decline of 5.7% year-on-year, while retail sales fell more sharply by 20.2% to 8.701 million units. In this contracting market, domestic Chinese brands have dramatically increased their share.
According to industry association figures, the market share for Chinese-brand passenger vehicles has surged from 42.0% in the first half of 2021 to 71.8% in the first half of this year, representing sales of 9.138 million units. In June alone, this share exceeded 75.5%. This marks a dramatic reversal from just five years ago, when joint venture brands commanded nearly 60% of the market. Their share has now shrunk to less than a quarter, signaling a fundamental restructuring of power within the industry.
Joint Venture Brands Face Unprecedented Pressure
An examination of the first-half sales rankings reveals the dominance of domestic automakers. SAIC Motor led the pack with cumulative sales of 2.045 million vehicles, making it the only Chinese company to surpass the 2-million-unit milestone. Notably, its own-brand sales reached 1.469 million units, accounting for 71.8% of the group's total volume. Other major domestic players also performed strongly: BYD sold 1.8085 million units (with approximately 991,000 in China), Geely sold 1.423 million, Chery sold 1.3575 million, and Chongqing Changan Automobile Company Limited sold 1.1189 million vehicles.
In stark contrast, former joint venture leaders have been left behind. Sales for Volkswagen AG in China plunged 25.9% year-on-year to just 973,000 units in the first half. Other major foreign brands also saw significant declines: BMW China sales fell 20.4% to 261,800 units; Mercedes-Benz China sales dropped 28% to 210,200; and Porsche deliveries in China collapsed by 32% to a mere 14,500 vehicles.
The trend extended to Japanese automakers, with Toyota China sales down 17.1%, Honda China sales plummeting 34.7%, and Nissan China sales declining 15.0%. Among American brands, SAIC-GM sales dipped 5.7%. The standout exception among foreign brands was Tesla Motors, which saw its China deliveries grow 28.4% to 467,900 units, maintaining strong growth in a challenging market.
Interestingly, while many new domestic challengers position themselves against Tesla, its sales remain robust. The competitive pressure from these new energy vehicle (NEV) startups appears to be most acutely felt by the traditional joint venture segment—eroding the historic market share of brands like BMW, Audi, Mercedes-Benz, Toyota, Honda, Volkswagen, and GM.
The sales volumes of many major joint venture/foreign brands, such as BMW China, Nissan China, SAIC-GM, and Mercedes-Benz China, now cluster in the range of 200,000 to 270,000 units for the first half. This translates to an average monthly delivery rate of just 33,000 to 45,000 vehicles. Several domestic NEV makers are already approaching or surpassing this level. Li Auto sold 193,400 units, NIO sold 191,100, and Xiaomi sold 185,100. The leading domestic NEV brand, Leapmotor, saw sales surge 60% year-on-year to 356,500 units, overtaking several established joint venture players.
Reasons Behind the Joint Venture Decline
Several key factors are driving this shift. First, the macro market environment has changed drastically. The traditional internal combustion engine (ICE) vehicle market is shrinking rapidly, and the electrification transition of many joint venture/foreign brands has lagged behind expectations. In the first half, NEV wholesale sales in China reached 6.788 million units, with their market penetration rate rising to 54.1%. Conversely, retail sales of ICE vehicles fell 26.4% to under 4 million units, a steeper decline than the overall market.
Many foreign brands, such as Volkswagen, SAIC-GM, and the major Japanese automakers, still rely heavily on ICE vehicle sales in China. The overall contraction of this segment has directly hurt their performance. Furthermore, these multinational and joint venture companies often suffer from lengthy decision-making processes, requiring headquarters approval for model adjustments in China, which slows their product iteration speed compared to agile domestic rivals.
Second, the strong rise of Chinese automakers has intensified competition, with smart and connected features becoming a crucial purchase criterion for Chinese consumers. Early electric offerings from many premium foreign brands were often adaptations of existing ICE platforms, lacking dedicated EV architectures and falling behind in key areas Chinese buyers now prioritize, such as 800V fast-charging and advanced driver-assistance systems.
While joint venture brands are now racing to catch up—with initiatives like Volkswagen Anhui's ID. series, BMW's "Neue Klasse" platform, and Mercedes' MMA platform accelerating their China rollout—they are still in the early stages of this counteroffensive. Meanwhile, domestic premium NEV brands like AITO, NIO, Xiaomi, and Zeekr are redefining luxury with smart cabins, advanced driving aids, and spacious interiors, drawing consumers away from traditional foreign brands.
Ultimately, Chinese brands have gained pricing power in the NEV segment through economies of scale and vertically integrated supply chains, further squeezing the生存空间 of joint venture players.
The Path Forward for Joint Ventures
Faced with intense competition, joint venture and foreign brands are actively seeking transformation. Their strategies generally follow two paths: optimizing operational efficiency through capacity adjustments and organizational streamlining, and accelerating the launch of NEV models specifically tailored for the Chinese market, leveraging local supply chains for faster iteration.
Based on first-half sales performance, the joint venture sector as a whole remains in a critical phase of transition. The pressure from the强势崛起 of domestic brands is immense. However, the vast and diverse Chinese market still offers room for differentiated competition. The future for these brands hinges on their ability to genuinely integrate into China's electrification and智能化 industry rhythm. Time is of the essence, and the market will ultimately reward those enterprises that truly understand the evolving needs of Chinese consumers.
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