At the end of July, Xinhua News Agency published a report from the China Association of Automobile Manufacturers, highlighting that Dongfeng Motor, which has long been among the top three in the domestic auto industry, only achieved single-digit growth in production during the first half of this year. This caused it to drop to fourth place, while Changan Automobile made its debut in the "Big Three" for the first time. The news sent shockwaves through the industry.
However, there is an important correction to be made. According to the "Double 215" principle outlined in Article 6 of the newly issued Automobile Industry Development Policy by the National Development and Reform Commission on May 21, rankings should now be based on **sales** rather than **production volume**. If we use sales as the metric, Dongfeng would actually rank fifth, behind Beijing Automotive (BAIC). It appears that the mistake wasn’t made by the Xinhua reporters but rather stemmed from a lingering reliance on outdated conventions.
Last year, when Changan and BAIC were catching up with Dongfeng, some analysts predicted that one of them would eventually overtake the traditional "Big Three." The government was expected to face embarrassment, and indeed, that day has arrived. While it may not be a direct embarrassment, it presents a challenge for the new policy, which was introduced just three months ago. How should the government handle companies like Changan and Dongfeng now that the old framework is no longer valid?
The idea of "key support for the three major groups" dates back to 1994. It was a core part of industrial policy and had been consistently followed. In public perception, the "Big Three" were seen as the main players, while others—like Changan—were considered underdogs or even "guerrilla" companies. But now, Changan has shown significant strength, raising the question: Should it now be recognized as a "regular army" unit?
According to Article 6 of the new policy, only enterprises with a domestic market share exceeding 15% or annual auto sales revenue surpassing 15% of the total industry revenue can qualify as large-scale auto groups eligible for separate development plans. Changan’s market share is reported at 10.64%, so it doesn’t meet the threshold. However, Dongfeng’s sales are also below 15%, at 9.89%. Will the National Development and Reform Commission remove it from the list of supported groups? If so, the company may not take it lightly.
For years, many automakers outside the "Big Three" have expressed dissatisfaction with the policy of favoring only three groups. While they may not voice their opinions openly, their thoughts are clear. Previous discussions on industry policies revealed differing views: FAW suggested focusing on 2-3 companies; Dongfeng called for clearer support policies; Hafei argued that mergers should be market-driven, not government-led; and others questioned the feasibility of setting numerical targets.
Now, although the new policy no longer explicitly mentions supporting the "three major groups," the emphasis on the "Double 15" criteria makes it clear what the government is aiming for. With the market dynamics shifting, the sales figures of the companies the government wants to support don’t meet the 15% threshold. As a result, many are questioning whether the policy will be effective or if it will face resistance from the industry.
Of course, it's too early to say that Dongfeng is out of the "Big Three" for good or that Changan will remain in third place. The automotive market is ever-changing, and companies can rise or fall quickly. Dongfeng may still make a comeback. Reports suggest that the company has been focusing on foundational work and plans to launch a major transformation after next autumn. With strong partnerships like Nissan and a long-term strategy called the "2nd 3rd Power Plan," there’s reason to believe that Dongfeng could regain its former glory.
In short, the new policy is testing the industry’s adaptability. Whether the "Big Three" will maintain their dominance or be overtaken by emerging players remains to be seen. For now, the future of the Chinese auto industry looks more dynamic than ever.
**Attachment:**
Top 10 Auto Manufacturers in First Half of 2024 (Based on CAAM Data)
1. FAW Group – Production: 495,989 units, Sales: 438,610
2. SAIC – Production: 482,020 units, Sales: 439,593
3. Changan – Production: 264,583 units, Sales: 271,660
4. Dongfeng – Production: 263,563 units, Sales: 252,548
5. BAIC – Production: 262,192 units, Sales: 260,028
6. Hafei – Production: 112,335 units, Sales: 110,037
7. GAC – Production: 85,542 units, Sales: 83,781
8. Changhe – Production: 67,669 units, Sales: 65,810
9. Jianghuai – Production: 66,351 units, Sales: 65,810
10. Jinbei – Production: 57,535 units, Sales: 52,520
**Note:** BAIC saw the highest growth, with sales up over 70%, surpassing Dongfeng. GAC and Jianghuai also grew by over 50%. Only Jinbei saw a decline in both production and sales. These ten companies accounted for 80.6% of total output and 79.8% of total sales.
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