William Li, the founder, chairman, and CEO of NIO Inc. (NYSE: NIO), has stated that China's automotive industry is now entering the most severe phase of its "final competition stage."

Li made these remarks while speaking at the 2026 China Automotive Chongqing Forum, held from June 12th to 13th.

He reflected that a prediction made in 2019, which forecasted the "final stage" would arrive around 2024-2025, has largely aligned with the current reality. However, he noted that market conditions this year are exceptionally challenging, particularly within the domestic retail sector.

Data from the China Passenger Car Association shows a 19.5% year-on-year decline in domestic retail sales for the period from January to May. "In the first quarter, some still believed it might be due to policy-driven demand being pulled forward from last year," Li said. "But after April and May, the industry should no longer harbor such illusions."

Regarding the potential for a rebound in the second half of the year, Li's assessment is pessimistic. He predicts that for the full year, the entire industry should be psychologically prepared for domestic retail sales to fall by 15% to 20% compared to the previous year.

Li explained that the underlying reason is relatively straightforward, primarily related to the vehicle ownership base. With the national passenger vehicle fleet reaching 370 million units, many households already own more than one car. The automotive market is transitioning into an era of growth from the existing stock, rather than the previous era of pure incremental growth.

"Perhaps the industry as a whole hasn't fully recognized this shift," he stated. He believes that with this recognition, many marketing and product strategies would be formulated differently.