China's Auto Industry Enters the "Seven Kingdoms" Era: Integration, Competition, and Global Rise

At the eye of the storm in the global automotive industry, Chinese car companies are undergoing a transformation. At the start of 2025, strategic restructurings such as Dongfeng and Changan's alliance, the integration of Zeekr and Lynk & Co by Geely, and the cross-sector partnership between GAC and Huawei mark a shift from "going it alone" to a phase of deep integration through "forming alliances." In the future, the industry will enter the "Seven Warring States" era: market concentration will increase, resources will converge towards leading players, and technological barriers will become moats. Transitioning from the "hundred boats racing" Spring and Autumn period to the "the strong get stronger" Warring States era, this transformation will not only reshape industry dynamics but also overturn the global power structure of the automotive industry.

Recently, the Pangoal Institution released a new series of public welfare reports titled "The New Age of Great Navigation: The Era of the 'Seven Warring States' for Chinese Automakers is Approaching." Through a series of research and discussions, the report uses the century-long history of global automotive industry consolidation as a mirror to analyze the path of Chinese automakers from the "Warring States" era to the "Seven Warring States" era. It also predicts the accelerated evolution of the "Seven Warring States" competition landscape over the next decade.

Reviewing the century-long integration process of the global automotive industry, the core capability for enterprise survival has always revolved around technological iteration and market adaptability. The winners often perform well across three dimensions: technological capability, market orientation, and globalization. The interplay of these three capabilities constructs the survival matrix of modern car companies: technological capability determines the upper limit of development, market orientation tests operational efficiency, and globalization measures strategic depth. In future competition, companies that can convert cutting-edge technological achievements into scale effects, maintain healthy cash flow in price wars while sustaining R&D investment, and diversify risks through geographic layout will be able to navigate cycles and continue to lead.

Over the past seven decades, China's automotive industry has forged a unique development path, achieving differentiated positioning and innovative breakthroughs in the global industrial evolution. Central state-owned enterprises, local state-owned enterprises, joint ventures, and private enterprises have collectively formed a diverse market landscape characterized by both competition and collaboration. The industry has progressively completed several stages of transformation—from breaking through the blockade period by introducing, digesting, and absorbing technology, to reconstructing the industrial landscape, and ultimately achieving a strategic shift in the new energy vehicle sector. This has established a comprehensive competitive advantage spanning technological R&D, product iteration, and standard output, reshaping the global automotive industry's value map.

Facing the transformation of the global automobile industry from traditional fuel vehicles to new energy vehicles, as well as the widespread application of cutting-edge technologies such as intelligence and networking, the competition among automobile companies will become more complex and uncertain. The direction of automobile companies is a focus of industry attention. Which companies can stand out? What will the future market pattern be like? After comparing multiple data analyses and industry trend assessments, the Pangu Think Tank research team believes that with the intensification of industry competition, the number of Chinese automobile enterprises (groups) will be greatly reduced, eventually consolidating to seven - forming a "Seven Powers of the Warring States" pattern.

"3 Million Vehicles Club": BYD, Geely Secure "Qualification for Advancement"

For automotive companies, an annual sales volume of 3 million vehicles means "earning a seat at the main table," while 1 million is the "survival threshold." Behind these sales figures lies the brutal escalation of survival rules. Data from 2024 shows that BYD, with 4.2721 million vehicles sold (a 41.3% year-on-year increase), firmly holds the top spot among Chinese automakers, while Geely delivered an impressive 3.337 million vehicles (a 22% year-on-year increase), making them the first to enter the "3 million club"—the threshold for top-tier players. Over the next decade, these two private enterprises may compete head-to-head with Toyota and Volkswagen at even higher annual sales scales.

Based on the integration patterns of the global automotive industry and an analysis of the competitive landscape in the Chinese market, it is predicted that over the next decade, China's automotive industry will accelerate its evolution toward a "2+5" tiered structure: with BYD and Geely Holding as the core leaders, complemented by five major strategic groups formed through restructuring (the refined state-owned enterprises/new forces/market-oriented players). Ultimately, after the integration, a 2+5 pattern will be established (possibly even fewer than seven companies).

"Global Top Ten: China's Rules Challenge the 'Century-Old Order'"

The 2024 global top ten automakers list has quietly "changed color," with two Chinese companies making the cut, ranking fifth and tenth with 4.27 million and 3.34 million vehicles, respectively. Looking ahead to 2035, using 3 million vehicles as the threshold for entering the world's top ten, it is roughly estimated that once China's auto industry forms a "2+5" new pattern in the future, at least five of the top ten global automotive groups will be from China, rewriting the century-old pattern dominated by the United States, Japan, and Germany.

Behind this leap lies the innovative model of "whole-chain global expansion." Chery, with an export volume of 1.14 million vehicles (a year-on-year increase of 21.4%), has once again set a new record for Chinese automakers' overseas exports, capturing the mid-to-low-end market with its cost-performance advantage. Geely, by investing in Proton and acquiring British Manganese Bronze Holdings, has established localized factories in Southeast Asia and Europe. BYD, adopting a "technology-for-market" strategy, has exported technical standards to countries like Thailand and Hungary. The PanGu Institute predicts in its report that by 2035, overseas sales (including exports and overseas production) of Chinese automakers will exceed 35%, forming a dual-circulation pattern of "stabilizing domestic volume and expanding overseas growth."

Accelerated Shuffling: Mergers and Acquisitions Will Become the Primary Means of Consolidation in China's Automotive Industry

In the process of forming a "Seven Warring States" landscape in the future, mergers and acquisitions (M&A) will become the primary method of consolidation. Five types of M&A pathways are expected to accelerate their formation. **First**, **state-owned group structural reorganization**: Mergers and integrations may occur between central state-owned enterprises (SOEs) and local SOEs, or among SOEs themselves, with several major M&A cases anticipated (e.g., GAC and SAIC). **Second**, **foreign strategic investments**: For instance, multinational automakers may acquire domestic new-energy vehicle (NEV) startups' smart technologies to rebuild local competitiveness. NEV startups could be acquired by leading foreign companies—indeed, one of Leapmotor's major shareholders is now France's Stellantis Group. **Third**, **market-oriented mixed-ownership reform M&A**: Leading private enterprises may acquire stakes in or control over state-owned production resources, or state-owned automotive assets may be entrusted to private management teams to enhance market orientation, efficiency, and competitiveness. **Fourth**, **reorganization among private enterprises**: This would enable rapid access to technology, distribution channels, and market share, strengthening competitiveness. **Fifth**, **acquisition of underperforming foreign assets by private enterprises**: Through technology absorption and market channel integration, these assets could undergo value reconstruction. We believe that over the next decade, a series of M&A activities will ultimately drive China's automotive industry toward a new "Seven Warring States" era, where seven major conglomerates will dominate the competitive landscape. Although non-market delays from local governments and state-owned capital may arise during the M&A process, the overarching trend remains unstoppable.

Urban Economic Underworld: Reordering of the Automotive City Seating Arrangement

A city reshuffle led by the automotive industry is quietly unfolding. In 2024, Shenzhen surpassed the long-established automotive city of Guangzhou with a production volume of 18.29 million vehicles, driven by the "dual-core engine" of BYD's global headquarters and Huawei's intelligent driving technology. Chongqing, leveraging Changan Automobile and the Seres Mega Factory, achieved a new energy vehicle production volume of 953,200 units in 2024, marking a year-on-year increase of 90.5%, significantly outpacing the national growth rate by nearly 60 percentage points. The industrial sector's contribution to the city's GDP growth exceeded 30%.

The layout of China's automobile production capacity will profoundly impact the spatial distribution of China's urban economy. In 2023, the total output value of China's automobile industry reached 11 trillion RMB, accounting for nearly 10% of the national GDP, making it the largest economic pillar in China. With the advancement of intelligent connectivity and multimodal transportation (such as flying cars, robots, and other new business models), the scale of the automobile industry will expand even further. Currently, China's automobile production capacity layout is rapidly shifting from decentralized expansion to regional clustering, and the concentration of urban economies in the automobile industry's layout adjustment will also increase. Guided by central policies, the future will not see "blossoming everywhere," but rather a decreasing number of automobile enterprises and increasing industrial concentration, with China's economy becoming more concentrated in certain cities. Therefore, it can be said that the "incremental" growth from intelligent connectivity and the "new growth poles" defined by the multimodal transportation ecosystem—such as flying cars, robots, and other new business models—will contribute a high proportion of revenue for automobile companies and become the main driving force for urban reshuffling. As the industry becomes more geographically concentrated, urban differentiation will intensify. Cities that actively embrace major enterprises, mergers and acquisitions, and the resources from such activities will benefit in the process. Cities that do not embrace the trend of mergers and acquisitions will further diverge. How local governments can use policy guidance and infrastructure support to compete for leading automobile enterprises will become the new focus of regional economic competition.

From "Manufacturing Powerhouse" to "Rule Exporter"

The rise of Chinese automobiles is no longer limited to sales figures. The global carbon neutrality process has created a window for the reconstruction of regional technological standards. Enterprises that master the power to set the rules of the game will occupy a high ground in the leap forward of the global value chain. BYD's CTB battery-body integration technology and Huawei's ADS 3.0 intelligent driving system are penetrating the global industrial chain through patent licensing and standard-setting. In Southeast Asia, Geely is exporting complete vehicle technology and management experience; in Europe, NIO's battery swap station network challenges the dominance of charging piles. By 2035, China's automobile exports will form a composite overseas model based on new energy vehicles, intelligent solutions, and infrastructure EPC, truly achieving a dimensional leap from "product output" to "industrial rule output."

When the "Seven Powers of the Warring States" pattern is set, Chinese companies may dominate the rules of the game in the smart electric era. This is not only an industrial upgrade but also a competition at the level of civilization—rewriting oil hegemony with batteries and reconstructing driving culture with computing power. The "Age of Great Navigation" for Chinese automobiles has already set sail.