China’s Auto Market in May: Winners and Losers at a Crossroads—Who’s Thriving, and Who Could Be the Next Evergrande?

Introduction

China’s auto market in May 2025 showed positive overall sales growth, but a closer look reveals a dramatic acceleration of a fierce survival-of-the-fittest battle and a deep structural reshaping of the industry. The market’s unique character—a relentless pursuit of innovation under “hellish conditions”—was vividly reflected in the May sales results.

1. The Winners’ Circle: Powerhouses Armed with Tech and Speed

The most striking trend in May was the dominance of local Chinese brands, especially those that have successfully navigated the transition to New Energy Vehicles (NEVs).

• BYD: The Unassailable Leader
  BYD maintained its commanding lead, selling 382,500 units in May. Its cumulative sales from January to May reached 1.76 million units, a staggering 40% year-on-year increase. BYD’s continued growth is fueled by its technological innovations like the Blade Battery and the 5th-gen DM hybrid system, a product lineup spanning all price points, and an aggressive global expansion (exports surged by 112%). Its closed-loop industrial chain, encompassing manufacturing, technology, and an entire ecosystem, remains its most formidable competitive advantage.
• Geely: A Model for NEV Transformation
  Geely Auto demonstrated incredible momentum, with both May and Jan-May sales growing by nearly 50% year-on-year. Crucially, its NEV sales soared by 135% to 138,021 units, now accounting for 59% of its total sales. The success of its “Galaxy” series, which surpassed 100,000 monthly sales, proves Geely’s NEV strategy has firmly taken root.
• Chery: The Export Titan
  Chery maintained steady growth with 205,732 units sold in May. It solidified its position as China’s top auto exporter, with exports hitting 100,737 units. The phenomenal cumulative growth of its iCAR brand (402.71%) signals that Chery’s NEV division is also rapidly gaining traction.
• Changan: Stable Growth and Elevated Status
  Changan continued its stable growth trajectory. A significant recent development is the spin-off of the automotive business from its parent, “China North Industries Group,” into an independent central state-owned enterprise. This move is expected to elevate Changan’s status and provide a more favorable environment for core technology investment and market competition.
• The New Guard: Champions of “China Speed”
  The growth of EV startups, the “new forces,” was nothing short of brilliant.
  • Leapmotor: Led the startup pack with 45,067 deliveries in May, a 148% YoY increase. Its aggressive new model launches and an ambitious target of 500,000 annual sales showcase its ambition.
  • Xpeng: Delivered 33,525 units, up 230% YoY, marking its seventh consecutive month of over 30,000 sales, driven by the successful launch of its MONA M03.
  • Li Auto: Surpassed 40,000 monthly deliveries for the first time. The renewal of its L-series and its upcoming pure-electric SUV are highly anticipated.
  • Xiaomi: Announced a successful market entry with over 28,000 units sold in May. Its strategy of leveraging its smartphone ecosystem for cross-selling and the explosive popularity of the SU7 highlight its massive potential.
  • Hongmeng Zhixing (Huawei): With 44,454 units sold, Huawei’s technology is proving its mettle in the auto market, with strong sales from its Wenjie M9 and M8 models.

2. The Underdogs: Where “Next Evergrande” Warning Lights Are Flashing

Behind the winners, a harsher reality is setting in for others. Joint venture (JV) brands and some local brands lagging in the NEV transition are facing a severe crisis.

• The Joint Venture Dilemma: GAC-Honda & Dongfeng-Honda
  Japanese JV brands are in the most dire situation. GAC-Honda’s May sales plummeted by 58% YoY to just 13,410 units. Dongfeng-Honda also struggled, with sales down 26.7%. They face a toxic mix of aging product lineups, a slow NEV transition, and a lack of localized marketing and services. While some JVs like SAIC-GM and FAW-Toyota saw a rebound in May, this was largely due to a low base effect from a catastrophic 2024. The fundamental dilemma of transformation remains. In the face of rapid market changes and the rise of local brands, JVs urgently need radical innovation just to survive.
• Great Wall Motor: A Troubled NEV Transition
  Great Wall Motor’s sales saw a slight monthly increase but were down 0.54% year-to-date, making it the only one of the top five OEMs with negative growth. The most alarming sign is the 67.3% collapse in May sales for its core NEV brand, “Ora,” which sold only 1,961 units. This indicates its NEV transition is not going smoothly. Great Wall’s heavy reliance on traditional ICE vehicles and its struggle to build a sustainable NEV business are its biggest challenges.
• NIO: The Financial Fragility of a Potential “Next Evergrande”
  NIO delivered 23,231 vehicles in May, up 13.1% YoY, but this is hardly a sign of a turnaround. As noted in our previous reports, NIO faces a dire financial situation: a loss of 160,000 RMB (approx. $22,000) per car, cumulative losses exceeding 100 billion RMB over 11 years, and a debt ratio of 92.5%. While it’s trying to boost sales with new brands (Ledao, Firefly) and models, this volume increase is insufficient to cover its astronomical losses. The combination of a brutal price war and excessive investment has eroded its profitability, placing NIO among the companies most at risk of a financial crisis akin to the Evergrande collapse. The market is no longer just looking at sales figures; it’s scrutinizing profitability, cash flow management, and sustainable business models.

Conclusion: A Market in Flux, A Ruthless Game of Survival

The May sales results clearly show that China’s auto market has activated a “natural selection system.” Companies armed with superior technology, a swift NEV transition, and a deep understanding of the local market are enjoying explosive growth. Conversely, those slow to adapt or with weak financial foundations are rapidly losing ground.

The extreme competition, epitomized by the term “involution,” is accelerating innovation. But it also serves as a stark warning: without sufficient capital, speed, and a clear strategy, production capacity can quickly turn from an asset into a liability. China remains a land of opportunity, but it is also a minefield of patents and a brutal survival game that must be navigated with extreme caution.

May 2025 China Auto Market Sales Data (Selected)