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In 2007, the Chinese auto industry underwent a major reorganization, and it's not an exaggeration to say that the merger of SAIC with itself was enough to illustrate this transformation. However, looking ahead, 2007 was just the beginning of a larger restructuring wave, marking the start of a more profound reshaping of the sector.
From a policy perspective, the Chinese government has long emphasized the need for consolidation within the automotive industry. Early policies supported the development of a few key players, and later, the "Automobile Industry Development Policy" and the "Eleventh Five-Year Plan" outlined clear goals for industry concentration. For instance, the policy aimed at forming several well-known brands by 2010, while the Five-Year Plan explicitly encouraged mergers and acquisitions to create enterprises with production capacities of up to one million units annually.
Although the exact number of companies to be formed wasn't specified, the general direction was clear: "Through market competition and macro-control, strategic reorganizations will optimize and upgrade the industry structure." Thus, the formation of large-scale automobile groups was seen as a national priority, aiming to be completed by 2010.
By 2008, which marked the third year of the Five-Year Plan, the restructuring efforts were in full swing. The process had gone through a planning phase in 2006, a launch phase in 2007, and entered a large-scale implementation stage after 2008—this became the central theme of China’s future auto industry strategy.
Looking ahead, some reports suggested that automakers with annual outputs below one million vehicles would no longer be viable on their own, and even those producing two million units faced pressure from global competition. This led to predictions that reorganization and integration were inevitable for Chinese automakers, especially those influenced by foreign technology and international market dynamics.
Interestingly, 2008 also marked the 10th anniversary of the DaimlerChrysler merger, a landmark deal that ultimately failed to deliver long-term success. Many similar deals were driven by predictive reports, but the outcomes often fell short of expectations. While such forecasts have their basis, the execution of mergers is far more complex.
In China, a common mindset favors being a "chicken head" rather than a "phoenix tail"—a preference for leadership over subordination. With over 100 car manufacturers in the country, many of which are small or medium-sized, the challenge lies in selecting the right targets for consolidation. The question remains: which Chinese automaker will emerge as a global player?
SAIC Motor, FAW, and Dongfeng, each with production and sales volumes exceeding one million units, were active in the M&A landscape. Companies like Guangzhou Auto, Beijing Automotive, and Changan may follow suit. What about Chery or Brilliance? Their roles in this consolidation war remain uncertain.
Will they wait for opportunities like Nanjing Auto, or take initiative and merge to become global giants? The state's influence is strong, but even with government backing, the post-merger success depends on internal management and performance.
The industry is still evolving, and while the government sets the direction, the market ultimately decides who survives and thrives. Whether through top-down policy or bottom-up competition, the future of China’s auto industry is still unfolding.