At the end of July, Xinhua News Agency published a report from the China Association of Automobile Manufacturers stating that Dongfeng Motor, which has long been among the top three domestic automotive groups, only achieved single-digit growth in production during the first half of this year, dropping to fourth place. Meanwhile, Changan Automobile made its debut in the "Big Three" for the first time, causing a major stir within the industry.
However, there is a critical mistake in this report. 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 measured by sales, Dongfeng would actually rank fifth, behind Beijing Automotive. This error does not seem to stem from the reporters at Xinhua but rather from an outdated practice of relying on traditional metrics.
Last year, as Changan and BAIC began to close the gap with Dongfeng, some analysts predicted that one of them would eventually overtake the "Big Three." The government had anticipated this shift, and now it has finally arrived. While this may not embarrass the government, it raises a difficult question: How should the new policy address Changan and Dongfeng?
The concept of "supporting the three major groups" was introduced back in 1994 and has been a key part of industrial policy. In the public eye, these groups are seen as the elite, while companies like Changan were considered underdogs or even "guerrilla" players. However, Changan has now proven itself strong enough to challenge the status quo. Shouldn't it now be recognized as a legitimate player in the "regular army"?
According to Article 6 of the new policy, only enterprises that meet specific criteria—such as having a market share of more than 15% or generating over 15% of total industry revenue—can be classified as large-scale groups. Changan's market share stands at 10.64%, below the threshold. Dongfeng, with a 9.89% share, also falls short. Yet, both have long been considered part of the "Big Three."
This situation has led to growing dissatisfaction among companies outside the top three. Many have expressed concerns about the focus on just a few groups, arguing that the market should decide mergers and reorganizations, not the government. Some companies, like FAW and Hafei, have called for a more flexible approach, suggesting support for 2-3 major groups instead of a rigid structure.
Now, with the new policy in place, the question remains: Will the government adjust its strategy? The current market dynamics suggest that the old order is shifting, and the "three major groups" may no longer hold the same dominance they once did.
Despite this, it’s too early to write off Dongfeng. Reports indicate that the company is focusing on foundational improvements, with plans for a significant transformation after next autumn. With its partnership with Nissan and a well-defined long-term development plan, Dongfeng still has the potential to reclaim its position.
In the end, the automobile industry is dynamic, and tomorrow’s leaders could be today’s underdogs. As the saying goes, "Don’t count your chickens before they hatch." For now, the game continues, and the future of the "Big Three" remains uncertain.
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