At the Future Automotive Pioneer Conference on May 29, Avatr Technology Chairman Wang Hui revealed that 2025 domestic auto sales exceeded 34.4 million units but industry profit margin was only 4.1%, dropping further to 2.9% in Jan-Feb 2026. He proposed three "value leap" insights: shifting from selling cars to making premium products, from tech competition to safety focus, and from design following to original profitability.
Industry Profit Margin Crisis: The Cliff from 4.1% to 2.9%
China's auto industry is undergoing a profit crisis. Wang disclosed that 2025 domestic auto sales exceeded 34.4 million units, yet industry profit margin was only 4.1%; Jan-Feb 2026 saw a further decline to 2.9%. This figure means selling cars is barely profitable anymore.
Wang stated bluntly: "Sales without profit are fake sales; scale achieved through price wars is false prosperity." This diagnosis cuts to the industry's core contradiction—under fierce price competition, companies sacrifice profits for market share, but this model is unsustainable.
The Essence of Involution: Competing Against Your Own Profit
Wang analyzed that over the past three to five years, automakers' strategies have been highly homogenized, making involution the simplest outlet. But in the end, companies aren't competing against rivals—they're competing against their own profits. This "self-harming" competition is eroding the entire industry's health.
The NEV sector's tech involution is particularly severe, competing not only on price but on product technology, features, and ecosystem services. Industry health continues declining; companies must find new value creation paths.
Three Value Leap Insights: Changan's Transformation Template
Facing these challenges, Avatr and Changan Group proposed three "value leap" insights, providing a reference framework for industry transformation:
Insight 1: From Selling Cars to Making Premium Products
Changan streamlined its product lineup from 63 models to 36 models, concentrating resources on blockbuster products. Avatr positions itself as a premium intelligent EV brand, covering the 250,000-700,000 yuan price range, with average prices in April 2026 rising 20,000-30,000 yuan compared to the previous generation.
The core logic: fewer product lines, more concentrated resources, higher quality, higher premiums. Achieve profit margin recovery through premiumization rather than scale expansion cost dilution.
Insight 2: From Tech Competition to Safety Focus
In March 2026, Avatr released the "Taihang Intelligent Chassis 2.0" technology, introducing distributed electric drive technology capable of maintaining control at 220 km/h with a blown tire. This metric surpasses industry mainstream levels, shifting competition focus from "feature racing" to "safety baseline."
Wang believes that when tech involution reaches diminishing marginal returns, safety becomes consumers' core decision variable. Companies should redirect R&D resources from "showing off" to "saving lives," building true technological moats.
Insight 3: From Design Following to Original Profitability
Avatr insists on original design, establishing two design centers in Munich and Shanghai, gathering over 200 top global design talents. The second-generation concept car was unveiled at this year's Beijing Auto Show, receiving positive user feedback.
Original design is not only a source of brand differentiation but also a support for premium pricing. In the red ocean of follow-the-leader design, original capability will become Chinese brands' core asset for going global.
Market Implications: The Industry Turning Point from Scale to Value
| Dimension | 2023-2024 | 2025-2026 |
|---|---|---|
| Industry Average Profit Margin | 5-6% | 2.9-4.1% |
| Price War Intensity | Intense | White-hot |
| Product Strategy | Many and broad | Few and premium |
| Technology Focus | Feature racing | Safety first |
| Design Strategy | Following imitation | Original-driven |
Wang's "value leap" insights are equally relevant for export-oriented companies. For markets like Central Asia and Russia, consumers sourcing Chinese vehicles through platforms like EX1000.COM care not only about price but also product safety, design originality, and brand credibility. The transformation from "selling cars" to "making premium products" will help Chinese automakers build sustainable brand premiums in overseas markets.
