Chery boss says around 90 per cent of Chinese automakers lose money

Chery International president Zhang Guibing estimates around 90 per cent of Chinese automakers are losing money, warning that rising development costs will force more companies to disappear.

Speaking to Australian media, including CarExpert, in China, Mr Zhang was asked how many manufacturers would survive the competition, and whether Australian buyers could be confident new brands would still exist in five to 10 years.

“Most Chinese car manufacturers are listed on the stock market and release financial reports. Looking at those reports, I think most of them, maybe around 90 per cent, are losing money," he said.

“Too many companies, surely later will die, will disappear."

His concern extends to the research and development spending needed to keep new vehicles competitive.

“And from [the] other side, now when you develop the new technology car, so the R&D investment compared to before is much higher," he said.

“Because now the new technology, before maybe it’s like a mechanical side, now it’s too many new technology developments.

“So the investment is much higher than before. So one side, more and more companies lost money, but [on the] other side, now the investment [is] getting more and more high.”

Independent research points to widespread losses among China’s electric vehicle (EV) manufacturers.

Consultancy AlixPartners reported in its June 2026 Global Automotive Outlook that only three of 30 Chinese manufacturers focused on so-called 'new-energy vehicles' achieved full-year profitability in 2025.

That category includes not only EVs, but also extended-range electric vehicles (EREVs) and plug-in hybrids (PHEVs). AlixPartners’ study therefore covers a narrower group than the industry-wide estimate Mr Zhang was discussing.

AlixPartners forecasts only seven of those 30 manufacturers will break even by 2030, with weaker companies expected to leave the market or become acquisition targets. It also identified growing production capacity and underused factories as sources of financial pressure, particularly for smaller manufacturers.

According to a report from Sohu earlier this year, the Chinese automotive industry's profit margin fell to 3.2 per cent in the first three months of 2026, while automakers are also dealing with excess production capacity. Last year, China manufactured around 35 million new vehicles, but its annual production capacity was estimated at around 55 million.

Chery itself remains profitable. Hong Kong-listed Chery Automobile reported a net profit of 9.02 billion yuan – approximately A$1.92 billion – for the first half of 2026, down 9 per cent from a year earlier. The result included foreign-exchange losses, while gross profit increased.

Its half-year accounts also show research and development expenses rose 28.3 per cent to 6.67 billion yuan, or approximately A$1.42 billion. The company attributed the increase to greater development activity and higher personnel expenses.

Overseas customers accounted for 69.1 per cent of Chery Automobile’s revenue in the half-year, compared with 46.3 per cent a year earlier. The company said a greater contribution from overseas vehicle sales, which carried higher gross margins than domestic sales, helped improve its overall gross margin.

In Australia, Chery recorded 4205 deliveries in September, while Omoda Jaecoo reported another 2310. Both increased their sales compared with September 2025, according to the latest monthly sales figures.

The group is preparing to expand its local brand lineup. Freelander, iCaur, Jetour, and Exlantix are all heading here in 2027, along with Luxeed, which was confirmed for Australia this week. Lepas is due before the end of 2026.

Mr Zhang was also asked whether development costs would eventually ease as vehicle technology matured, drawing a comparison with the mobile-phone industry. He said he couldn’t see the same stability in cars.

“But I think now even for me, I couldn’t understand what will be tomorrow’s car, the day after tomorrow’s car.”

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