Car Giant Boss Says Auto Industry is ‘Overcapacity’ Amid Chinese Market Turmoil

The boss of a Chinese car giant has pulled in the reins on investment spending, claiming the global automotive industry has “severe overcapacity”.

‍Li Shufu, founder and chairman of Geely – the parent company of brands including Volvo, Polestar, Lotus, Smart, Lynk & Co, Zeekr, and Proton – told the Chongqing Auto Show his company will not be building new manufacturing plants, according to a report from the South China Morning Post.

“The global automotive industry is mired in severe overcapacity woes, [so] we have decided to stop building new car plants,” said Li in an online video clip.

The Chinese car industry has seen a significant manufacturing expansion, particularly abroad – with manufacturers like Chery, BYD and GWM building factories overseas – while news emerged in February 2025 Geely were closing in on an agreement with Renault to produce zero and low emissions vehicles in Brazil.

However, this rapid expansion has caused issues for the health of the Chinese car market.

The over-production of electric vehicles in particular has caused an inventory surplus, resulting in Chinese manufacturers slashing their vehicle prices to clear stock domestically and gain market share, triggering the most recent price war between car makers in China.  

The price war, coupled with the recent issues over ‘zero-kilometre’ used cars – where new vehicles have been marked as sold by manufacturers only to be sold immediately as second-hand by affiliated dealers or third parties to clear stock – has even sparked intervention from the Chinese government, encouraging manufacturers to self-regulate.

In Australia, dozens of news marques have entered the market from China in recent years, with 15.6 per cent of new vehicle sales in Australia in 2025 coming from Chinese manufacturers according to the Australian Automotive Dealer Association. 

Geely Auto and its parent company, Zhejiang Geely Holding Group, sold over 3.3 million vehicles globally in 2024.