High-Quality Development in the Automotive Industry

High-quality development in the automotive industry refers to a systematic transformation that, built upon world-leading production and sales volumes, drives the industry's shift from "scale and speed" to "quality and efficiency", and leaps from "price wars" to "value-driven competition". The introduction of this concept signifies that, after 70 years of development, China's automotive sector is at a critical turning point in its transition from an "automotive giant" to a "global automotive powerhouse"—a shift that is no longer merely about volume growth or isolated breakthroughs, but a comprehensive reshaping of its development logic, industrial ethos, and global influence.

Strategic Positioning and Development Priorities

The "15th Five-Year Plan" designates the automotive industry as a vital pillar of the real economy and a core vehicle for "new quality productive forces", with smart technology, green transition, and multi-industry integration serving as the three strategic pillars. Within this framework, intelligent connected new energy vehicles (NEVs) are positioned as key drivers for industrial upgrading, technological leadership, and the delivery of "dual carbon" targets, with smart vehicle technologies taking centre stage in industry competition throughout the "15th Five-Year Plan" era.

The automotive sector is transitioning from standalone manufacturing into a core hub for the multi-dimensional "Vehicle-Energy-Road-Cloud-City" ecosystem, driving deep technological integration and real-world deployment across renewable energy, telecommunications, and transport sectors to forge a new "manufacturing + services + ecosystem" paradigm.

Core Philosophy and Strategic Pathways

Safety is the bedrock of high-quality development. As vehicles evolve from mere transport into smart mobile terminals, the scope of automotive safety has expanded beyond passive crash protection to an overarching "holistic safety" framework—encompassing functional safety, Safety of the Intended Functionality (SOTIF), cybersecurity, data privacy, and corporate operational resilience. Zhu Huarong, Chairman of Changan Automobile, encapsulated this in the philosophy of "New State Enterprise, New Changan, New Safety", emphasising that vehicle safety, data security, and business sustainability are equally non-negotiable.

Shifting from "market share battles" to "ecosystem capability". Industry competition has moved past simple price-cutting or spec-sheet wars, evolving into a battle of holistic ecosystem capability, sustained technological innovation, and robust supply chain synergy. Carmakers must abandon the mindset of "speed at all costs" and "scale equals victory", pivoting instead towards long-term forward development, continuous engineering iteration, and sustainable profitability models.

Eliminating destructive "involution" to foster a healthy industry ecosystem. Destructive price wars, misleading advertising, and the export of "zero-mileage pre-registered cars" under the guise of used vehicles are now being actively reined in by regulators and industry players alike. Fu Yuwu, Honorary President of the China Society of Automotive Engineers (China SAE), urged the sector to build a "healthy and disciplined operating environment", asserting that cutthroat self-cannibalisation yields no winners, and only by ending vicious competition can true innovation flourish.

Regulatory Framework and Policy Safeguards

Between 2025 and the first half of 2026, a series of key policy measures were rolled out in rapid succession, establishing a firm regulatory baseline for high-quality development.

Reining in cutthroat market competition. In July 2026, the Ministry of Industry and Information Technology (MIIT) convened a symposium with leading carmakers, explicitly directing them to reject destructive competition, thoroughly check Conformity of Production (CoP), and tighten safety validations for advanced driver assistance systems (ADAS) and automated driving features. The State Administration for Market Regulation (SAMR) issued the "Compliance Guidelines for Pricing Conduct in the Automotive Industry", setting clear boundaries against predatory pricing, while MIIT enforced a 60-day vendor payment term commitment, successfully reducing average supplier payment cycles across major carmakers to around 54 days.

Strengthening baseline safety standards. Between January and July 2026, several mandatory national standards (GB standards) were gazetted or enforced, spanning traction battery safety, ADAS safety, door handles, side-impact protection, cybersecurity, and over-the-air (OTA) software updates. The revised national battery standard elevated thermal runaway propagation criteria from a "5-minute advance warning" to a stringent "no fire, no explosion" rule, while the new door handle safety regulations strictly prohibited fully flush, pop-out electric door handles.

Steering technological innovation. MIIT is accelerating the draft of the "15th Five-Year Plan for Intelligent Connected New Energy Vehicles", driving breakthroughs in critical tech such as next-gen electronic and electrical architectures (EEA) and high-compute automotive chips, expanding pilot programmes for "Vehicle-Road-Cloud Integration", and refining safety and technical standards for ADAS and autonomous driving systems.

Industry Trends and Key Challenges

Accelerated adoption of smart tech. In the first half of 2026, the fitment rate of combined driver assistance systems (ADAS) in new passenger cars hit 70%, while Level 3 autonomous driving entered commercial pilot licensing, speeding up the rollout of autonomous delivery pods and Robotaxis.

Global expansion enters a new phase. Complete vehicle exports reached 5.096 million units in 1H 2026, up 65.3% year-on-year, though the export strategy is shifting from mere CBU shipments to a full-value-chain footprint encompassing brand building, aftersales networks, and localised supply chains—an approach termed "ecosystem export". Chinese carmakers are actively working to avoid exporting domestic price-slashing tactics abroad, prioritising long-term, localised, systematic, and community-integrated global operations.

Fleet decarbonisation remains a massive undertaking. The "15th Five-Year" Carbon Peak Roadmap mandates that NEVs make up 30% of total vehicles on the road by 2030, necessitating an accelerated scrappage of older internal combustion engine (ICE) vehicles, the expansion of EV charging and battery-swapping infrastructure, and the unlocking of carbon-saving potential via closed-loop battery recycling. Bridging heavy manufacturing, resources, and mobility, the automotive industry remains the linchpin for decarbonising the broader transport sector.

China's automotive industry now stands at a historic crossroads, transitioning from volume dominance to value leadership. Whether it can successfully pull itself out of the price-war quagmire and pivot towards technology and value-driven competition—while building holistic capabilities spanning safety, innovation, manufacturing discipline, and ecosystem integration—will determine if it can complete the historic leap from an automotive giant to a true global automotive powerhouse.