Looking back at the beginning of the 15th Five-Year Plan, China's automobile industry has never carried such strong excitement and uneasiness as it is today. On the one hand, new energy and intelligent networking technologies are leading the world, and the scale of exports has increased exponentially; on the other hand, the domestic demand market has cooled sharply, price wars have spread, and industry profits have declined. After rapid growth, the industry is entering a critical moment when it must recalibrate its course.

It is against this background that the 2026 China Automobile Forum with the theme of "New Start, New Opportunities, New Journey-Drawing a New Blueprint for High-Quality Development of the Automobile Industry" was held in Jiading, Shanghai. At the conference forum, a series of data outlined the profound divisions that China's automobile industry is experiencing: domestic sales fell 21.1% year-on-year, but exports surged 65.3%. The structural characteristics of "pressure on domestic demand and strong foreign trade" made "cold inside and hot outside" the core topic throughout the three days of discussion.

Faced with this unprecedented temperature difference, a reporter from "China Business News" interviewed many people in the automobile industry chain and industry experts during the forum. A strong consensus is that China's automobile industry has reached a critical point where it must answer "where to go." The intertwined and conflicting views inside and outside the forum ultimately point the answer to three clear directions-from price game to user value competition, from scale expansion to long-term doctrine, and from simple product export to compliance and localization.

Fu Bingfeng, vice president and secretary-general of China Automobile Manufacturers Association (hereinafter referred to as the "China Automobile Association"), called on companies to "keep the bottom line and return to rationality", deeply cultivate differentiated tracks, find the right position for themselves, abandon short-term opportunism, and establish a long-term development concept.

Automobile exports explode

In the first half of 2026, China's automobile market presented an unprecedented "watershed." Data from the China Automobile Association shows that in the first half of the year, automobile production and sales totaled 14.993 million and 15.017 million respectively, down 4% and 4.1% respectively year-on-year. At first glance, the total decline seems moderate, but when taken apart, it is a picture of "ice and fire": domestic sales were 9.921 million units, a year-on-year drop of 21.1% ; exports were 5.096 million units, a year-on-year surge of 65.3%. Between cold and hot, China's automobile industry is standing at an unprecedented crossroads.

"The automobile industry did not have an easy time in the first half of the year." Chen Shihua, deputy secretary-general of the China Automobile Association, said that the contraction in volume is no longer a distant warning that "the wolf is coming", but a real operating pressure. Liu Zheng, director of the Industry Information Department of China Association of Automobile Manufacturers, analyzed that due to the combined influence of multiple factors such as the switch and adjustment of the "two new" policies, the halving of purchase tax, and the setback in fuel vehicle consumption confidence, domestic automobile sales showed a double-digit decline in the first half of the year. Lang Xuehong, deputy secretary-general of China Automobile Dealers Association, revealed the transmission mechanism of the decline in sales from a channel perspective. She bluntly said at the forum: 2026 is the "product year" for automobiles, but it is not the "market year".

This sentence is not false. From January to June this year, the number of new cars on the market in China exceeded 600 (including full-scale statistics such as annual minor modifications, configuration derivatives, and limited supply vehicles), with at least 3 new cars on the market every day.

The "export" at the end of the "hot" is not a pulsed explosion overnight. Behind it is a steep growth curve that lasts for six years. According to statistics from the China Automobile Association, China exported 995,000 vehicles throughout the year in 2020; it has increased year by year since then-exported 2.015 million vehicles in 2021, exceeded the 3 million mark in 2022, jumped to 4.91 million vehicles in 2023, and reached 5.859 million vehicles in 2024. In 2025, it reached 7 million vehicles for the first time, reaching 7.098 million vehicles.

Wei Wenqing, deputy secretary-general of the China Automobile Association, analyzed the deep logic behind the rapid growth of exports. The reason why China can achieve this qualitative change is not only based on its huge domestic consumer market and complete manufacturing industry foundation, but more importantly, my country has grown into a global automotive industry innovation highland-the new energy electric vehicle industry is leading the world in the transformation and upgrading of the new energy electric vehicle industry, and the technological level of intelligent connected vehicles goes hand in hand with that of the United States.

Break through the dilemma of entanglement with technological innovation

Many guests at the 2026 China Automobile Forum gave ideas for the next step of breaking the situation for China Automobile from different dimensions. Summarizing the views of all parties, the guests believed that the key to breaking through the entanglement dilemma of China's automobiles in the future lies in shifting from "price competition" to "value competition" and from "scale expansion" to "long-term doctrine"; and the core of deepening globalization lies in upgrading from "going out" to "going in" and from "vehicle export" to "deep localization."

Many industry insiders called on the forum to return to rational competition and deepen product differentiation. Fu Bingfeng bluntly said at the forum that there are currently more than 130 automobile brands on sale. A large number of companies are pursuing a "large and comprehensive" product layout. The homogenization of models has intensified, and the strategic goals have significantly exceeded the market carrying capacity.

Luo Junjie, vice president of China Machinery Industry Federation, proposed from a more macro perspective that the entire industry should standardize the ecology, achieve quality improvement and efficiency improvement, improve the governance system, quality system, and self-discipline system, guide enterprises to standardize and orderly competition, and resolutely resist chaos such as irrational competition and blind expansion.

Zhu Jiangming, chairman and CEO of Zero Run Automobile, pointed out: "The current automobile industry is highly competitive. If you want to survive for a long time and develop healthily, you must ultimately rely on technology and products."

From vehicle export to "localization and deep cultivation"

If the restoration of domestic demand tests the industry's determination and wisdom to "seek inward," then the deepening of globalization tests the ability and pattern of China's automobiles to "grow outward."

At present, going to sea is no longer an "optional answer" for some leading companies, but a "must-answer question" related to the incremental space and long-term development of the entire industry. As many guests at the forum pointed out, overseas markets have become important growth poles for China's automobile industry as the domestic market enters stock competition and profits continue to be under pressure.

But at the same time, global trade protectionism is on the rise, and tariff and localization requirements in core markets such as Brazil, the European Union, and Mexico continue to rise; shortcomings such as spillover of internal competition, mutual recognition of regulations and standards, supporting overseas supply chains, and localized operation capabilities are also increasingly apparent. The vehicle export model that simply pursues quantitative expansion is encountering increasingly obvious ceilings.

Faced with this situation, the sea-going model is undergoing a key transformation-from simple product exports to deep localization of the industrial chain, and upgrading from "going out" to "going in".

Talking about taking root globally, Nan Hua, senior manager of macro and industrial research at BAIC Foton Motor's overseas business department, shared that first, from the perspective of the external environment, global trade protection has intensified. Some core markets such as Brazil, the European Union, and Mexico have tariffs and territorial requirements. The rate requirements are gradually increasing. The single vehicle export model has obvious bottlenecks. Only by building factories locally and increasing the localization rate can trade barriers be effectively hedged. Second, from the perspective of market operations of automobile companies, only by building factories locally can we effectively respond to local differentiated needs and enhance product competitiveness.

Great Wall Motors, which has also been deeply involved in overseas markets for many years, focuses more on finding differentiated solutions from the dynamic balance between market demand and policy evolution. Guo Haibo, director of international strategic operations of Great Wall Motor, said when talking about going abroad that Great Wall's going abroad strategy can be summarized as "following the trend and adapting measures to local conditions." The so-called "following the trend" has two meanings: one is demand, and the other is policy. From the perspective of demand, markets that promote localization, especially production localization, usually have larger market size and strong regional radiation capabilities, such as Brazil and Thailand. From the policy point of view, it is necessary to focus on the changes in territorial laws and regulations. "Adapting to local conditions" is reflected in the flexibility of localization promotion mode. Localizing production in different markets can take multiple paths such as building factories, acquiring existing production capacity, sole proprietorship, joint venture and even contract manufacturing.

When China cars penetrate into the global market at such a rapid pace, an unavoidable question also surfaced: how does the host country view this wave of localization led by China companies?

Zhang Shuo, chief representative of the Beijing Representative Office of the European Automobile Manufacturers Association, delivered a reference perspective in his speech at the forum. He pointed out that industrial localization itself has positive significance, but it should not be forced by the government. Enterprises themselves know best when to promote localization and when to adopt the KD method is most appropriate-only by proceeding from the actual operation of the enterprise and effectively reducing costs can they truly benefit end consumers. If the government does have the policy intention of promoting localization, it is recommended to provide corresponding support and incentive measures to guide it, rather than simply making requirements or setting restrictive clauses.

It is worth mentioning that the American consulting firm Arrow predicted in its report that China's automobile exports will increase to nearly 10 million units in 2026, a significant increase from 7.1 million units in 2025. China will become the first country in the world to exceed the 10 million vehicle export mark.

But the significance of this figure is not only how big it is, but also because it marks that China's automobile industry is completing a fundamental transformation from "domestic demand-driven" to "dual-cycle-driven."

Source: Leading the way to the sea by Gaoshen's car

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