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Dongguan, once heavily reliant on processing trade, is now facing significant challenges. The implementation of the Labor Contract Law, the ongoing appreciation of the renminbi, rising raw material costs, policy adjustments in processing trade, and stricter tax and environmental regulations have all contributed to a difficult business environment. In response to these pressures, some companies have opted for closures or relocations. This transformation has had a direct impact on the automotive market in Dongguan.
From March 31 to April 20, approximately 6,000 new cars were registered in the city, while in April 2007, the total number of license plates issued was 10,646. This year’s sales have seen a sharp decline, with only a few brands like BMW, Chery, and Haval performing well. Mainstream brands such as FAW Toyota, Dongfeng Nissan, and Guangzhou Honda are struggling to meet their monthly sales targets. The decline in car sales is partly due to the reduction in consumer groups from enterprises undergoing transformation, as well as uncertainty in the economic climate, which has dampened consumer confidence.
**Commercial Vehicles, Minivans, and SUVs Hit Hardest**
According to data, between 1978 and 2007, Dongguan approved a total of 37,376 processing and trading enterprises, of which about 15,053 remain active, and 22,323 have closed down. Most of the failed businesses were small and medium-sized enterprises, often based in Hong Kong and Taiwan, operating in labor-intensive industries like toys, shoes, and clothing. In 2007 alone, 909 companies were shut down and 88 relocated. While the numbers seem relatively small, industry insiders suggest that up to 1,000 Taiwanese-funded companies have either left or are planning to leave Dongguan due to increased costs and regulatory pressures.
This wave of corporate restructuring has hit commercial MPVs, light trucks, minivans, and SUVs particularly hard. These segments are closely tied to the processing industry, and as companies reduce orders, demand for these vehicles has dropped significantly. Sales of these models have fallen sharply, with dealers reporting a noticeable drop in customer inquiries.
**Commercial Vehicle Sales Face Cold Trends**
In the commercial MPV segment, brands like JAC Refine, Dongfeng, Buick GL8, and Honda Odyssey dominate the market, accounting for nearly 80% of total sales. Dealers report that since December last year, this sector has been unusually quiet. Commercial MPVs are typically used by large companies for employee transportation and guest services. However, with many companies either relocating or cutting back, demand has slowed. Some companies are waiting to see how things develop before making purchases.
Sales of commercial MPVs have declined significantly this year, with one brand reporting a 30% drop in April compared to the previous month. Despite incentives offered by dealers, the lack of demand from target customers has made it difficult to recover lost ground.
**SUV Market Faces Both Sales and After-Sales Pressure**
The SUV market in Dongguan is divided into two main categories: economical models suited for both passenger and cargo use, and mid-range models designed for urban driving. Brands like Great Wall Haval and Ford Explorer fall into the former category, while models such as the CR-V and Sportage cater to more premium buyers. However, sales of economical SUVs have been declining, with mid-range models gaining traction.
Dealers report that SUV sales have dropped significantly this year, with some brands experiencing a 60% decrease in the first quarter. Industry experts attribute this to both the corporate transformation and fuel shortages. While the latter is a short-term issue, the long-term impact of reduced corporate demand is more concerning.
**Minivan Inventory Surges**
Minivans, popular among small business owners and self-employed individuals for their affordability and cargo space, are also seeing increased inventory pressure. Many dealers reported a 40% drop in sales in April compared to March. The main consumers of minivans are small businesses and those involved in raw material supply chains, which have been hit hard by the current economic conditions.
As a result, many minivan drivers are delaying purchases, leading to a loss of repeat buyers. Some dealers estimate a 20% drop in potential customers this year. However, if not for the corporate transformation, sales might have remained stable, especially with local government policies encouraging upgrades in transportation.
**Future Outlook: Transformation or Opportunity?**
Despite the challenges, there are signs of hope. Officials note that while some companies have moved to Vietnam or Indonesia, the Pearl River Delta still holds advantages in logistics and infrastructure. A recent survey shows that most Hong Kong and Taiwanese companies plan to stay in Dongguan for the next 3–5 years. The government has also committed to not introducing harsher policies on processing trade in the next five years, boosting business confidence.
With a shift toward attracting high-tech companies and improving the IT industry chain, Dongguan is positioning itself for long-term growth. Industry leaders believe that while short-term pain is inevitable, the transformation will ultimately strengthen the economy and create a more competitive business environment.
October 12, 2025