Gasoline Vehicle Overcapacity: Su Bo Highlights the Imminence of Automotive Industry Ecosystem Restructuring

"Currently, gasoline vehicles are experiencing a significant decline in production, sales, and profit margins, plagued by overcapacity and facing a critical survival crisis. Some enterprises have already ceased production or gone bankrupt," stated Su Bo, former Vice Minister of the Ministry of Industry and Information Technology, at the China EV100 Forum (2025). "Market demand now dictates the pace of the transition from gasoline to electric vehicles and the fate of gasoline vehicles. The restructuring of the automotive industry ecosystem is upon us." Su Bo emphasized that China's automotive market is undergoing a crucial transition from gasoline to electric vehicles. Currently, at least 30 million gasoline vehicles and 20 million new energy vehicles have been produced, with most new energy capacity being newly built, absorbing only about 2 to 3 million idle gasoline vehicle capacities.

Su Bo, former Vice Minister of the Ministry of Industry and Information Technology (Image source: China EV100 Forum) In response, Su Bo offered targeted suggestions, urging relevant government departments to promptly study and formulate policies to guide and lead the industry. While promoting the electrification of gasoline vehicle enterprises, they should support the expansion of new energy vehicle capacity primarily through mergers and acquisitions, joint-stock reforms, and asset acquisitions of gasoline vehicle enterprises, rather than large-scale land acquisitions and new construction, to mitigate further resource waste from continued parallel development.

Established Gasoline Vehicle Factories Lose Favor

During the gasoline vehicle era, joint ventures firmly dominated the Chinese automotive market, occupying seven of the top ten sales positions. However, February 2025 data revealed that independent brand passenger vehicles surpassed a 70% market share for the first time, with BYD, Geely, Changan, and Chery accounting for nearly 50%. This year in March, classic gasoline vehicles like the Mazda 6, Ford Focus, and Mercedes-Benz A-Class announced production cessation plans. Under the rapid electrification and intelligent transformation of the automotive industry, many iconic classic cars have come to an end.

The allure of established traditional gasoline vehicle factories has significantly diminished. In early 2025, the GAC FCA Changsha factory, which had failed four auctions, was relisted for sale at a reduced price. On January 10, the factory was auctioned online for the fifth time, with a starting price 90% lower than the previous failed auction, approximately 992 million yuan. Since June last year, the factory had been publicly auctioned four times, all unsuccessful due to a lack of bidders. To attract potential bidders, the starting price for the fifth auction was significantly reduced by nearly 1 billion yuan compared to the first auction.

Traditional gasoline vehicle production lines are attracting bidders through significant price reductions, and the GAC FCA Changsha factory is not an isolated case. As early as late 2023, Beijing Hyundai sold its Chongqing factory to Chongqing Liangjiang New Area Yufu Industrial Park Construction Investment Co., Ltd. for 1.62 billion yuan. The transfer price of this factory also underwent four reductions, with listing prices of approximately 3.684 billion yuan, 2.58 billion yuan, 2.248 billion yuan, and 1.917 billion yuan, respectively. Ultimately, the transaction price was 1.62 billion yuan, a significant decrease of over 2 billion yuan compared to the initial listing price of 3.684 billion yuan.

In recent years, many automakers have closed gasoline vehicle factories and built electric vehicle factories instead. In 2024, Honda announced the closure of two vehicle manufacturing plants in China belonging to Guangzhou Honda and Dongfeng Honda, respectively, and the construction of two electric vehicle factories, restoring Honda's annual production capacity in China to 1.44 million vehicles.

Image generated by Doubao AI with prompt: gasoline vehicle production line

It's worth noting that not only traditional gasoline vehicle factories but also many new automakers that failed in the new energy vehicle market competition established factories during the market transformation and reshuffle. For example, after the collapse of previously troubled carmakers such as WM Motor, Aichi, Enovate, Baoneng, and Evergrande, their idle new energy factories also face the fate of closure, merger, and reorganization.

Rapid Market Transformation

The decline in gasoline vehicle production, sales, and profit margins is closely tied to the ongoing electrification and intelligent transformation of the automotive market. According to the China Association of Automobile Manufacturers, in 2024, China's new energy vehicle production and sales ranked first globally for the tenth consecutive year, exceeding 10 million vehicles annually for the first time: new energy vehicle production and sales reached 12.888 million and 12.866 million vehicles, respectively, with year-on-year increases of 34.4% and 35.5%.

This market shift has also altered the ranking of automobile production in many traditional automotive hubs. According to National Bureau of Statistics data, in 2024, the top ten provinces in terms of automobile production were Guangdong, Anhui, Chongqing, Jiangsu, Shandong, Shanghai, Shaanxi, Zhejiang, Jilin, and Hubei, with production volumes of 5.7074 million, 2.6203 million, 2.5401 million, 2.25 million, 1.8381 million, 1.8075 million, 1.7535 million, 1.6922 million, 1.507 million, and 1.3891 million vehicles, respectively. Notably, Jilin and Hubei, ranking last among the top ten, held significant positions during the gasoline vehicle era. However, with the new energy transformation of the automotive market, automobile production in these regions has significantly declined in recent years. For example, Jilin's annual automobile production reached 2.889 million vehicles in 2019 and dropped to 1.507 million in 2024; Hubei reached 2.6661 million in 2017 and dropped to 1.3891 million in 2024.

In Su Bo's view, the global electrification of automobiles is a landmark event in the century-long history of the automotive industry, representing a historical opportunity and necessity. When formulating the national "Twelfth Five-Year Plan," the Ministry of Industry and Information Technology prioritized new energy vehicles based on three important judgments after in-depth research:

Firstly, due to the unsustainability of fossil energy supply, it is imperative to adjust the energy structure for automobile use as soon as possible. In 2011, the International Energy Agency predicted that by the end of this century, the proportion of fossil fuels like coal, oil, and natural gas in total energy consumption will drop to about 15%, while the proportion of photovoltaic and solar energy will reach about 70%. BP's "World Energy Outlook 2023" concurs, predicting that the global and Chinese share of fossil energy consumption will drop from 80% in 2019 to 28% in 2050.

Secondly, global climate change and environmental pollution control urgently necessitate the development of new energy vehicles. In the past, Beijing's PM2.5 levels were severely exceeded, and research indicated that vehicle exhaust emissions contributed 30% to this issue.

Thirdly, a new round of technological revolution and industrial transformation has spurred electrification, leading the automotive industry toward digitization, networking, and intelligence, which will become the dominant direction. The State Council's approval of the New Energy Vehicle Development Plan (2012-2020) was a strategic deployment to address these three opportunities and challenges. The past decade's global push for the "three transformations" in the automotive industry has demonstrated significant achievements in these areas.

Mergers and Acquisitions Are Inevitable

Indeed, alongside industry changes, the restructuring and integration of the automotive industry will be the general trend.

Gou Ping, Deputy Director of the State-owned Assets Supervision and Administration Commission of the State Council, also publicly stated at the China EV100 Forum (2025) that the Commission is steadily promoting the restructuring and integration of the automotive industry, conducting strategic reorganizations of central automobile enterprises, enhancing industrial concentration, concentrating advantageous resources like research and development, manufacturing, and marketing, and accelerating the creation of world-class automotive groups with global competitiveness, independent core technologies, and leading intelligent networking transformations.

The State-owned Assets Supervision and Administration Commission's statement seems to be sounding the clarion call for accelerated integration of central automobile enterprises. In February this year, Changan Automobile and Dongfeng Group Co., Ltd. simultaneously announced that their parent companies were planning reorganizations with other state-owned central enterprises, sparking speculation about a merger and reorganization between the two. At the 2024 performance communication meeting of listed automakers in late March, Dongfeng Group Co., Ltd.'s management stated, "The integration between the company and Changan is currently underway, and the controlling shareholder is planning a reorganization of the automotive sector under Changan." Data shows that in 2024, these two automakers' sales volumes reached 2.48 million and 2.68 million vehicles, respectively. If they merge, a vehicle giant with an annual sales volume of over 5 million vehicles will be born, surpassing BYD to rank first in China and fifth globally. At the beginning of 2025, events like the strategic reorganization of Dongfeng and Changan, the integration of Geely's Zeekr and Lynk & Co., and the cross-border alliance between GAC and Huawei marked a shift from "going it alone" to a stage of deep integration through "horizontal and vertical alliances." In fact, international automotive enterprises' reorganizations are not uncommon. The development histories of international giants like Volkswagen, the Stellantis Group, and the Renault-Nissan Alliance have all been strengthened through frequent mergers and acquisitions.

"The sales volumes of major groups are diverging, and competition is intensifying during this round of electrification and intelligent transformation," said Deng Chenghao, Vice President of Changan Automobile and CEO of Deep Blue Automobile, at the China EV100 Forum (2025). In the market reshaping process, many brands will disappear, and the number of remaining automotive brands may not exceed 20.

"We predict that in the future, there may not be an exceptionally large number of automakers, but there will also not be a very small number of brands, not just two or three," Zhang Yun, Global CEO of RDI Strategy Consulting, told ECNS. Chinese automakers need to prioritize innovation in their development, not attracting consumers through price advantages, but continuously building technological and brand advantages, eventually transitioning from "selling products" to "selling brands." As the automotive industry rapidly evolves, the glory created by gasoline vehicles in the past is quickly fading in the rearview mirror. This industrial revolution marks not only the end of an old era but also the beginning of a new one. The painful transformation of traditional automakers has given rise to a global voice in intelligent electric technology. The new era belongs to pioneers who dare to bid farewell to the old order and frontrunners who define the future with innovation.