In 2005, China's automotive industry was approaching the completion of its "Tenth Five-Year Plan." At a major international forum hosted by the China Automotive Technology and Research Center and the China Automotive Engineering Society, officials, industry leaders, and academics gathered to discuss the upcoming "Eleventh Five-Year Plan" for the sector. This marked an important turning point in the country’s automotive development.
During the Tenth Five-Year Plan, the Chinese auto market showed strong potential for sustainable growth. The industry gradually evolved into a key pillar of the national economy. As the Eleventh Five-Year Plan approached, the focus shifted from a "market-for-technology" model to the challenge of building independent brands. This transition would determine the future competitiveness of China's auto industry.
According to statistics, the automotive sector in China consists of over 5,800 enterprises, with total assets exceeding one trillion yuan. In 2004, domestic auto production reached 5.07 million units, generating more than 1.1 trillion yuan in output value and adding over 250 billion yuan to the national GDP. The industry's share of GDP increased from below 1% at the end of the Ninth Five-Year Plan to nearly 2%, signaling its growing importance.
The rising contribution of the auto industry to GDP reflects its transformation from a nascent sector into a core economic driver. According to the National Development and Reform Commission, by 2010, the industry’s added value is expected to reach 2.5% of GDP. Additionally, consumer trends have shifted: private car ownership has risen from less than 40% at the end of the Ninth Five-Year Plan to nearly 60%.
By 2010, the target for auto production is set to exceed 10 million vehicles. Industry projections suggest that demand will be around 8–9 million units, with vehicle ownership reaching approximately 55 million. The auto penetration rate is expected to hit 40 vehicles per thousand people. At that stage, China’s auto industry is anticipated to establish a leading role in industrial development, resource allocation, and market expansion. It will also enhance its technological innovation capabilities, improve industrial structure, and adopt advanced energy-saving, environmental protection, and circular economy technologies.
Independent brands are now central to the success or failure of the domestic auto industry. During the Fifteenth Five-Year Plan period, innovation began to gain momentum. At the Fifth Plenary Session of the 16th Central Committee, "independent innovation" was officially recognized as a national strategy. This shift signaled the end of the "market-for-technology" approach, as the focus turned toward developing self-owned brands.
Major automotive groups such as SAIC, FAW, and GAC have set ambitious goals for their own brands. SAIC aims to build an international company with a total production of 2 million vehicles by 2010, including 600,000 self-branded cars and 40,000–50,000 new energy vehicles. FAW plans to achieve 2 million total sales, with 1 million being independent brands, aiming for a 20% market share. While Dongfeng did not disclose detailed plans, it emphasized that independent brands will be a key focus. GAC also outlined its brand development strategy, including a target of 1.1 million passenger vehicles and 230,000 commercial vehicles by 2010.
Despite these efforts, many companies still face challenges in developing core technologies. For years, foreign automakers like Volkswagen have been reluctant to transfer advanced technology, forcing domestic firms to rely on outdated methods. Some companies even abandoned their own R&D efforts to focus on absorbing joint venture technology.
Industry analysts suggest that mergers and acquisitions may become a critical strategy for strengthening independent brands. By acquiring foreign brands or smaller companies, major groups can boost market share and accelerate brand development. This approach aligns with the government’s goal of achieving a 15% market share, which is considered the threshold for a major automotive enterprise. With this path, China’s auto industry could move closer to global competitiveness while ensuring long-term sustainability.
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