The price war has lost its effectiveness, and China's automobile industry has no way back.

In June in Chongqing, the sweltering heat rises. What makes people more anxious than the weather is the collective anxiety in the automotive industry.

At the 2026 China Automobile Chongqing Forum, many auto industry tycoons and experts gathered. They shed the hype and praise of previous years and began to face the most real problems in the market:

Declining sales, collapsing profits, ineffective price wars, and intensifying involution...

Every word hits the pain points of the industry.

This is certainly not about badmouthing the industry, but a rational review as the industry enters a new stage. The once high - speed - running automotive industry has officially bid farewell to the era of incremental dividends and entered the final circle of stock competition. This all - around warning reveals the truth of the cold winter in the auto market and also points out the core trends of industry transformation in the next few years.

The chill in the market is best reflected in the numbers. Wang Xia, the president of the Automotive Industry Committee of the China Council for the Promotion of International Trade, announced core data at the forum, showing that in the first five months of 2026, the retail sales of domestic passenger cars declined significantly year - on - year. The industry's profit margin has hit a new low. The overall revenue of the automobile manufacturing industry has continued to decline. The triple decline in sales, revenue, and profit has become the core tone of the auto market this year.

What's more troublesome is that the price war that has lasted for three years has become ineffective.

Since the wave of nationwide price cuts started in 2023, auto companies have taken turns to offer discounts, and new cars have been launched in droves. However, the market's excitement threshold has become higher and higher, and consumers are no longer impulsive to buy just because of low prices. Auto companies have fallen into a vicious cycle of "cutting prices to increase sales, making no profit, reducing R & D, having weak products, and relying more on price cuts to survive".

Wang Xia said bluntly that the marginal effect of the price war is accelerating its decline. Sales without profit support are just a numbers game.

Regarding the future trend of the industry, Li Bin, the founder of NIO, gave the most straightforward and cruel prediction: The domestic passenger car market may decline by 15% - 20% in 2026. The automotive industry has entered the cruelest stage of the elimination round.

This is not a short - term market fluctuation, but an inevitable result after industrial saturation. Now, the domestic car ownership is approaching its peak, the rigid demand for car purchases has shrunk, and the demand for car replacement has become more rational. The incremental market has completely closed, and everyone is competing for the same piece of cake. Involution has of course become a necessity.

At this forum, the participating tycoons reached a high - level consensus: The era of extensive growth in the industry has completely ended. The next five years will be a cruel reshuffle period. Prioritizing survival and abandoning recklessness are the only choices for all auto companies.

As the leader of traditional auto companies, Li Shufu, the chairman of Geely Holding, made a speech with great guiding significance. He abandoned the previous expansionist rhetoric and proposed that auto companies should take the initiative to downsize. Subsequently, Geely Automobile Group Co., Ltd. will orderly shut down, merge, and transfer relevant redundant entities and concentrate resources on core technologies and main platforms.

During the dividend period of the auto market, auto companies could seize the market by expanding their scale. However, in the stock era, blind expansion of production and multi - point layout will only disperse their strength. Li Shufu's active contraction confirms a logic: Scale does not completely equal strength, and survival is the most important thing.

Wang Hui, the chairman of Avita, directly pointed out the pain points of industry involution and clearly stated that simply engaging in price involution is a dead end. The biggest problem in the current market is the prevalence of homogeneous competition. Products that look the same, similar intelligent configurations, and highly overlapping pricing ranges have made consumers lose their sense of freshness.

Low prices not only fail to boost sales but also lower the brand value and make users question the product quality. Simply engaging in price wars will ultimately exhaust the company's R & D confidence and lead to a dead - end cycle of low - end involution.

Xu Jun, the senior vice - president and chief operating officer of Leapmotor, summarized the industry changes with a popular metaphor. In the past, the auto market was like climbing a mountain. Those who were brave and fast could seize the opportunity. Now it's like surfing. The market environment changes rapidly. Courage and speed alone are far from enough. One slight mistake and you'll be eliminated by the industry wave.

The collective warnings from these tycoons are not a sign of pessimism and weakness, but a clear understanding of industrial transformation. The Chinese automotive industry is facing many irreversible new trends, and a new industry order is taking shape.

First, low - profit normalization. Survival is the top goal. In the past decade, auto companies generally followed the development logic of "scale first". Even if they made thin profits or small losses, they still rushed to increase sales. However, the current industry profit margin is already lower than the industrial average. Most auto companies are in the dilemma of "selling more but earning less".

In the future auto market, ineffective scale will no longer be tolerated. Profitability will become the core survival threshold for auto companies. Cutting inefficient businesses, optimizing the cost structure, and conducting refined operations should become compulsory courses for all auto companies.

Second, the price war is completely out, and the value war is the real battle. The cruel market has proven that there are no winners in the low - price involution. Consumers' car - buying logic has completely changed. They no longer simply compare prices and parameters but value product technology, overall vehicle quality, intelligent experience, and brand service more.

Future market competition will completely bid farewell to "who is cheaper" and turn to "who is more valuable". Companies that can create differentiated products, build unique brand values, and provide high - quality user experiences can break out of the involution.

Third, the era of single - point blockbusters is over, and system capabilities determine the final outcome. This is easy to understand. Previously, Apple's blockbuster strategy for mobile phones was like a stimulant in the auto circle. Everyone wanted it, but after all, cars are not mobile phones, and no one can rely on one trick forever.

Now, technologies are highly similar, and the differences between products are minimal. Single - point advantages can no longer support a company's development. Future competition is a systematic competition across the entire chain. Only by comprehensively making up for weaknesses and building a coordinated and efficient system can a company withstand market fluctuations.

Fourth, the industry reshuffle is accelerating, and the elimination of the weak is a foregone conclusion. The ultimate elimination round in the industry predicted by Li Bin has officially begun. In the next five years, a large number of small and medium - sized auto companies that lack core technologies, have no brand barriers, and rely on following the involution trend to survive will be gradually eliminated by the market. Industry mergers and acquisitions will become the norm.

Market resources, user traffic, and policy dividends will continue to concentrate on high - quality leading companies. The automotive industry will move from a chaotic pattern of a hundred schools of thought contending to an oligopoly competition era where the strong get stronger.

In addition, global layout has changed from an optional track to a survival necessity.

With the intensifying involution in the domestic market and the continuous compression of profit margins, going global has become the core way for auto companies to break through the dilemma. Wu Jian, an executive of GAC Group, said that the competition in the domestic auto market has become saturated. Auto companies must take the initiative to go abroad and form the idea of "increasing sales at home and making profits overseas".

Reviewing the 2026 Chongqing Automobile Forum, all the warnings and reflections are conveying a core signal: The era of wild growth in the Chinese automotive industry has completely ended, and the era of speculation and following the trend is gone. The current cold winter in the industry is not a decline but an industrial upgrade through the survival of the fittest.

For auto companies, it's time to abandon illusions. This is the cruelest era for the Chinese automotive industry, but also the best opportunity for reshuffle.

When the tide recedes, the impetuosity is washed away, and the weaknesses are exposed. Companies with real technology, strength, and original intentions will eventually survive the cycle and stand firm. Now, the elimination round has arrived. Only by deeply cultivating value and taking the initiative to change can a company have the last laugh.

Let's cheer for the Chinese automotive industry together.

This article is from the WeChat official account "SuperEV - Lab" (ID: SuperEV - Lab). Author: Qin Zhangyong. Republished by 36Kr with permission.