The market share of foreign and joint venture automakers in China has fallen below 25% for the first time, driven by the rapid growth of domestic new energy vehicle (NEV) brands. In response, these joint ventures are ramping up efforts to localize operations in order to stay competitive.
In June, the combined market share of joint venture and foreign brands dipped to just 24.5%, a situation unthinkable three years ago, according to Wang Qian, deputy general manager of Dongfeng Motor Group and Dongfeng Nissan Passenger Vehicle, a JV between Nissan and Dongfeng. He spoke at the 2026 China Auto Forum in Shanghai.
The challenges for JV automakers go beyond just losing market share; they face a complete overhaul of the competitive landscape. The traditional JV model, where foreign partners supplied technology and Chinese partners handled distribution—exchanging cost advantages for market reach—has been fundamentally altered by the rise of China’s NEV market, Wang explained.
Data from the China Association of Automobile Manufacturers shows that foreign and JV automakers made up over 60% of China’s auto market in 2020. That portion has shrunk to 28% in the first half of this year.
All major foreign brands operating through joint ventures in China have seen sales decline in the past six months. Volkswagen’s deliveries decreased by 26% year-over-year to 971,000 units, while Japanese brands Toyota, Nissan, and Honda experienced drops of 17%, 15%, and 35%, with sales falling to 695,000, 237,000, and 206,000 units, respectively.
Luxury foreign brands also experienced setbacks. BMW’s sales in China fell 20% in the first half of the year to 262,000 units. Mercedes-Benz declined by 28% to 210,000 units, and Audi’s sales dropped 19% to 218,000 units.
Amid the shift toward electrification and smart vehicles, Chinese brands have edged ahead of their international counterparts by developing more agile product cycles, aligning product features more closely with consumer preferences, and optimizing organizational structures, noted Liu Yan, deputy secretary-general of the China Association of Automotive Manufacturers (CAAM).
To adapt, JV automakers are focusing on five strategic pathways: localizing R&D efforts, combining Chinese and international resources, adopting multi-tier brand positioning, overhauling sales channels, and utilizing global distribution networks. Several leading JV companies are already seeing positive market feedback from these approaches, according to Ron Zheng, head of Roland Berger’s automotive division for the Asia-Pacific region.
Dongfeng Nissan, for instance, has implemented a “GLOCAL” strategy where its China team drives decision-making and core technology development, making sure product upgrades keep pace with the market. Over the past year, the Wuhan-based company introduced three new models — the N7, N6, and NX8 — advancing development in pure electric, plug-in hybrid, and extended-range EVs.
Thanks to these initiatives, Dongfeng Nissan’s NEV sales increased by 192% in the first half compared to the previous year. NEVs accounted for 30% of total sales in June, up significantly from 7% at the start of the year.
Similarly, Beijing Hyundai (a joint venture between Hyundai Motor and BAIC Motor) is strengthening its local R&D capabilities. The company has built a research team of 1,500 employees across Beijing, Shanghai, Guangzhou, and Yantai, focusing on electrification, smart driving, electronic and electrical architecture, and manufacturing, said General Manager Li Fenggang at the forum.
The automaker is also collaborating with Chinese companies such as Contemporary Amperex Technology, ByteDance, Momenta, and Haomo.ai. With its enhanced local R&D, Beijing Hyundai plans to launch the IONIQ V — its first fully electric vehicle specifically developed for China — in September.








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