If there is any market in the current car market that is more abnormal, the microcar market is definitely one.

As news of the discontinuation of traditional models such as the Focus, Mazda 6, and Mercedes Benz A-Class followed one after another, the microcar market was filled with a lively scene of seniors returning in droves and newcomers entering the market with high profile.

On March 31st, after announcing 5 exterior color schemes, NIO's pure electric car Firefly once again unveiled its interior design, sparking discussions within the industry. As the third brand under NIO, Firefly is positioned as a premium small car, which shows the current popularity of the small car market.

Small cars are selling like hotcakes, but they can't make any money

Not long after, Chery also announced that the once legendary car Chery QQ will make a high-profile comeback as a pure electric vehicle at the Shanghai Auto Show. And Reading Motors, which has been dormant for two years, is also betting on the micro pure electric track, hoping to make a comeback with micro pure electric vehicles.

It is reported that Reading Motors announced the launch of the "Reading A50" based on a new intelligent microcar platform, which is expected to be launched in the second half of this year. In the future, Reading Motors will also launch the Reading A50 two door version "Reading A51" and the annual facelift model "Reading A52". The three models of the Reading A50 series are all pure electric small cars.

New forces and traditional car companies are stepping up the micro car track, reflecting the prosperity of the micro car market. According to statistics from the China Association of Automobile Manufacturers, in 2024, the wholesale volume of A00 class sedans will reach 1.2557 million units, with a cumulative increase of 41% in wholesale sales by manufacturers; The domestic retail quantity is 1.2579 million units, with a cumulative retail growth rate of 32%.

Small cars are selling like hotcakes, but they can't make any money

However, behind the prosperity, micro cars have been unable to break through the dilemma of profitability for a long time. On the one hand, small cars with a running volume of less than 100000 yuan rely on a low profit, high-volume business model. In the current intensifying price war, the prices of A00, A0, and A-class markets are gradually tightening, and the previous price advantage is no longer obvious. Only the price reduction strategy of exchanging price for volume can be adopted again to further compress the profits of individual vehicles. On the other hand, boutique cars priced over 100000 yuan are considered niche in the Chinese market, which favors large spaces. Whether it's the BMW MINI or the Smart, they both follow a small yet exquisite route. Although profits are more objective, sales cannot be compared to high-volume cars.

In the dilemma of not being able to balance sales and price, it is inevitable to breed the stubborn curse of selling small cars but not making money.

01 Small car market welcomes another spring

Since the launch of the Wuling Hongguang MINI EV in 2020, its extremely affordable price and practical positioning have quickly gained the favor of consumers. In addition to creating the miracle of sales exceeding 120000 in half a year and one million in two years, becoming the fastest single new energy vehicle model in the world to achieve one million sales, the Wuling Hongguang MINI EV has also revitalized the small car market that was once in a slump, bringing it another spring.

As early as 2022, Cui Dongshu predicted that with the continuous improvement of electrification, the product design of micro electric vehicles will be increasingly optimized, and the advantages of products will gradually be accepted by consumers. Micro electric vehicles have huge development space.

Small cars are selling like hotcakes, but they can't make any money

Considering China's future aging trend, especially the significant increase of nearly 10% in the population aged 60 and above after 2020, Cui Dongshu pointed out that the aging trend of the consumer group will suppress the development of A-class cars, promote the sales of A00 class cars, and drive the development of micro electric vehicles.

In addition, the per capita population size in China will continue to decline, but the magnitude of the decline will continue to converge; The growth rate of the number of households affected by this will be faster than the population growth rate, and the total number of households has not yet reached its peak in the next few years. Micro electric vehicles will also be more in line with the trend of small households in China.

In line with Cui Dongshu's prediction, after seeing the huge success of Wuling Hongguang MINI EV, both traditional car companies and new forces have launched micro electric cars, and the micro car market has once again turned from a blue ocean to a red ocean. Data shows that in 2024, sales of A00 and A0 level markets increased by 355000 vehicles.

Small cars are selling like hotcakes, but they can't make any money

In January 2025, the wholesale of A00 level sedans was 116700 units, a year-on-year increase of 38% compared to the same period last year, accounting for 13.45% of the wholesale share. Cui Dongshu, Secretary General of the Passenger Car Market Information Joint Branch of the China Automobile Dealers Association, stated that the A00 level market is experiencing a resurgence of competition from numerous brands 20 years ago. Recently, diversified A00 level main models and new products such as BYD, Geely, Changan, Chery, and FAW Besturn have shown outstanding performance, and micro electric vehicles are gradually demonstrating incremental potential.

At the same time, the A0 level market is also making efforts. According to data from the China Association of Automobile Manufacturers, the wholesale of A0 level sedans in January 2025 was 79200 units, a year-on-year increase of 25% compared to the same period last year, accounting for 9.13% of the wholesale market share.

The A00 class sedan and the A0 class sedan together account for nearly 23% of the market share.

02 Running with me while losing money

Although the cake in the micro car market is large, not everyone can eat it, and even if they get a share, most of them don't have much profit to make.

Taking the Wuling Hongguang MINI EV, also known as the legendary car, as an example, in the most glorious year of 2022, the Wuling Hongguang MINIEV family led the pure electric vehicle race with a cumulative sales of over 550000 units. Wuling's micro electric vehicle sales accounted for more than 40% of the total sales of micro electric vehicles in China.

Even though Wuling has already captured nearly half of the market and can greatly dilute research and development and mold costs through sales, and lower upstream component prices, its profits are still not considerable. Insiders familiar with automobile production, manufacturing, and sales stated that the known cumulative cost of components for the Wuling Hongguang MINIEV is approximately between 15000 and 23000 yuan. In addition to previous research and development, sales and marketing, and transportation expenses, the net profit per vehicle for this car may actually be less than 100 yuan.

Small cars are selling like hotcakes, but they can't make any money

In 2022, A00 class cars experienced price increases, but in 2025, when the price war was already close, prices in the car market continued to decline. In the era of new energy vehicles, where "a D-class SUV can be sold almost as cheap as a B-class SUV; a C-class sedan can compete with an A-class sedan", the price increase of A0 class and A00 class cars has become a complete luxury. Now, they are facing the approaching price of A-class cars and the blow of overtaking.

In this context, small and medium-sized cars can only maintain their price advantage by lowering prices and offering low prices, achieving the goal of exchanging price for quantity. Extreme cases have already pushed their prices into the 20000 yuan range. But under the strategy of low prices, not only will the profits of bicycles be compressed again, but the internal competition in the market will also weaken consumers' sensitivity to price reductions, making it difficult to ensure effective sales growth. In this context, micro cars that fail to meet sales benchmarks are only facing the challenge of running alongside them while losing money.

Small cars are selling like hotcakes, but they can't make any money

Taking the Euler brand as an example, in 2021, Euler sold 135000 vehicles, accounting for 98.5% of the total number of new energy vehicles in Great Wall Motors. However, the Euler brand failed to shoulder the heavy responsibility of Great Wall Motors' transformation, and behind its popularity, Great Wall Motors' performance has declined. In 2019, Great Wall Motors' operating revenue and net profit attributable to shareholders were 96.211 billion yuan and 4.497 billion yuan, respectively, a year-on-year decline of 3.04% and 13.64%.

Therefore, Wei Jianjun decisively abandoned Poly, and by 2024, the sales of the Euler brand had declined to 63300 units, a decrease of 71700 units from 2021 and a significant year-on-year decline of 41.69% from 2023. In terms of overall sales, in 2024, Great Wall Motors' annual sales were 1.2333 million vehicles, with a slight increase of only 0.21% year-on-year.

Although the annual sales remained largely unchanged, Great Wall Motors achieved a sharp increase in profits. According to the annual report, in 2024, Great Wall Motors achieved a total operating revenue of RMB 2021.95 billion, a year-on-year increase of 16.73%; The net profit attributable to the parent company was 12.692 billion yuan, a year-on-year increase of 80.76%; Deducting non recurring net profit of 9.735 billion yuan, a year-on-year increase of 101.40%.

This also means that after Wei Jianjun reduced the unprofitable Euler production and sales volume, the net profit of Great Wall Motors' bicycles has returned to over 10000 yuan after many years.

Small cars are selling like hotcakes, but they can't make any money

For high-end small cars with small and beautiful routes, whether they can run smoothly in China is still a question. On the one hand, Chinese consumers' pursuit of car size is increasing day by day, which also leads to a very limited audience for even the most exquisite small cars. In this context, the size of smart products is gradually increasing or decreasing to meet consumer needs. On the other hand, the higher selling price of high-end small cars also means that they cannot expand their sales volume. It is difficult to find high-end small cars at the top of the same level of sales rankings.

In addition, the price war has a comprehensive impact on the pricing of high-end small cars, with no blind spots in the car market. After the launch of the pure electric COOPER and pure electric ACEMAN, BMW MINI experienced a cooling off of up to 40000 to 70000 yuan, with the starting prices of the two models reaching 148800 and 163900 yuan respectively. Lowering prices also means giving up profits.

Not only for small and medium-sized cars, the dilemma of difficult profitability is unfolding at every level of the track, as evidenced by the 4.3% profit margin in the automotive industry. However, as the bottom end of the price band, the market trend of micro cars is not only the most classic epitome of the price war in the car market, but also its inevitable future direction. On the contrary, where will it ultimately go and how will it ultimately end up? All predictions about price wars are also highly applicable to it.

The only thing that can be certain is that before the price war stops, the dilemma of small cars selling well but difficult to make money will continue.