In recent weeks, major automotive companies have been making headlines with announcements of strategic mergers and integrations. Recently, SAIC Volkswagen revealed a significant move to consolidate its network channels by welcoming the entire Skoda lineup into Volkswagen brand dealerships. This marks a return to the SAIC Volkswagen family for Skoda, which had been operating independently since 2016.
Just a couple of days earlier, Geely also announced that its Geometry series, established in 2019, will formally merge with the Geely Galaxy brand, along with an integrated sales channel. This step represents Geely’s first major action following the release of its “Taizhou Declaration.”
Additionally, SAIC Motor has confirmed the integration of its Roewe and Feifan marketing services, bringing back Feifan, which was separated in 2021, under the SAIC passenger car umbrella. These strategic adjustments among leading automakers are not mere coincidences; they signal a profound transformation within the Chinese automotive industry. As the sector flourished, companies embarked on what many refer to as the “Age of Exploration,” characterized by rapid expansion and a willingness to take risks. However, as growth slows and the market becomes saturated, companies are beginning to retreat strategically.
This shift signifies a pragmatic approach for brands struggling with sales to “stop the bleeding.” With the high-growth phase ending and in the midst of price wars, it is wise for companies to scale back their ambitions during this “mid-game” in the automotive battle, with survival becoming the top priority.
The trend of strategic shrinkage among multiple brands is becoming apparent. Geely Auto Group has established an extensive array of brands, including Geely, Lynk & Co, Proton, and many others. This multi-brand strategy allowed Geely to cover a wide range in the new energy vehicle market, catering to products priced between 0 to 1 million yuan. The “timing” of this expansion has benefited Geely, as their electric vehicle sales surged amid the growing demand. After experiencing a 48% increase last year, Geely’s electric vehicle sales soared by another 76% in the first nine months of this year, totaling over 91,000 units sold, nearly half of their total vehicle sales.
However, as price wars loom and market competition intensifies, concerns have arisen about whether Geely’s multi-brand strategy may lead to increasing internal competition. On September 20, Geely Holding Group Chairman Li Shufu officially announced the “Taizhou Declaration,” outlining a strategic focus on five key areas to enhance competitiveness and transition into a new phase of transformation.
The first major action stemming from this transformation is the integration of the Geometry brand into the Geely Galaxy, which will be prioritized as the main emerging energy brand. Geometry debuted as Geely’s first independent electric vehicle brand in 2019, positioned as a premium option but struggled to gain traction in a competitive market. The brand’s lackluster performance made its adaptation and integration almost inevitable.
Similarly, Feifan’s situation mirrors that of Geometry; established during the electric vehicle boom in 2021, it was initially positioned as a high-end brand by SAIC. However, Feifan incurred disappointing sales figures, prompting a return to the fold of SAIC’s passenger car division to streamline its operations. Individually, SAIC’s various brands are now integrating resources to enhance overall efficiency in light of changing market dynamics.
Unlike Geely’s Geometry and Feifan, Skoda’s timing is rooted in the decline of combustion vehicle sales. Established in China in partnership with SAIC Volkswagen in 2005, Skoda was allowed to operate independently in 2016, enjoying a limited period of growth before facing steep declines. By 2023, Skoda’s sales dropped significantly to just over 22,000 units, necessitating its return to the SAIC Volkswagen dealership network to leverage existing resources and infrastructure effectively.
As smaller market players have begun to falter, major automotive groups face increasingly brutal competition. The wave of new entries that surged around 2014 has led to significant consolidation, with many brands facing an inevitable fate of closure or merging as they attempt to adapt to market demands.
The harsh realities of market competition have echoed through the halls of formerly dominant companies like SAIC. Executives speak candidly about the shifting landscape, emphasizing that strategic consolidation and focus will be necessities in the coming years, rather than optional tactics. As Geely’s Li Shufu aptly noted, facing these industry challenges head-on while honing their core competencies will be essential.
In light of the current environment, many industry experts predict that the market may soon stabilize, predominantly favoring a handful of major players, leaving a trail of smaller brands in their wake. As one automotive parts company chairman remarked, the industry has historically oscillated between vibrant competition and the dominance of a select few, and it appears that we are moving toward another consolidation phase in the Chinese automotive market.
