As the old adage goes, "The empire, long divided, must unite; long united, must divide." Starting in the first half of 2026, two Chinese automotive titans are embarking on major organizational overhauls that reflect this very principle. On one side, Byd Company Limited (BYD) is pushing its four major brands—Dynasty, Ocean, Denza, and Fangchengbao—toward independent accounting and profit-and-loss responsibility, while splitting its unified engineering academy into five separate units. On the other side, GEELY AUTO is consolidating: Geometry has merged into Galaxy, Zeekr and Lynk & Co are integrating, and a new centralized sales corporation now oversees marketing for six brands, with Li Shufu explicitly calling for the "orderly closure, merger, and transformation of redundant entities."
One is decentralizing, the other is centralizing. Though they appear to be moving in opposite directions, both are ultimately pursuing the same goal: when the dividends of scale have peaked, how does an organization restore its efficiency?
Why is BYD splitting up?
BYD's challenge stems from the high inventory pressure created by its unified architecture, which manifests in three key areas. First, research and development scheduling: all brands share the same engineering academy, leading to imbalanced resource allocation. A supplier once noted that when Fangchengbao requested the YunNian-Z suspension system for one of its models, the engineering academy responded with a "three-month wait" due to scheduling queues. After the reform, Denza independently decided to add a HUD to the D9's interior and directly signed with a supplier, bypassing the queue to capture a critical market window. Second, insufficient product differentiation: the highly standardized architecture caused overlapping configurations, designs, and launch timelines across models, leading to price band collisions between the Dynasty and Ocean series. The Han L and Seal 08, or the Qin L and Seal 06, are essentially the same car with different styling, resulting in internal customer cannibalization, wasted R&D resources, and terminal price wars. Third, channel overlap: many dealers who initially invested in the Dynasty network later also became Ocean network dealers. This channel duplication, combined with internal pricing overlaps, forced the Han L and Tang L to pivot toward overseas markets, while the Sea Lion 07 suffered sluggish domestic sales due to competition with the Tang series—yet exceeded 10,000 monthly units in exports. The product itself is sound; the problem is pitting it against siblings in the same market.
These anomalies stem from brands lacking autonomous decision-making power, passively accepting products distributed by headquarters, and shifting pressure onto dealers, which triggered dealer dissatisfaction in 2025. The "split" is essentially a substitution of the "invisible hand of the market" for the "visible hand of administration," allowing coordination costs to be absorbed through market mechanisms. Post-reform, BYD plans a comprehensive overhaul of its domestic channels in 2026, centered on dual-network integration—consumers may soon walk into a single, unified-branded store to see the full product lineup. Combined with an inventory circuit-breaker mechanism, SKU simplification, and suspension of wholesale shipments to high-inventory stores, the inventory cycle has improved significantly. According to sources, BYD's inventory turnover has shortened by three weeks since these policies took effect. Citibank research shows that in April 2026, BYD's dealer inventory in China stood at approximately 399,000 vehicles, representing 2.2 months of supply with an inventory coefficient of 1.8. By June, this figure had rapidly fallen to 1.3, well below the industry average of 1.58.
A visit by our team to a Beijing Dynasty network 4S store at midday found a steady stream of customers arriving for meals. The sales manager commented, "This year, consumers are more rational in their choices, no longer fixated solely on price. More people are coming in for the second-generation flash charging technology, and they understand that advanced tech doesn't come cheap." An interesting side note: we encountered a family of three at the store who own two BYD vehicles. Given their long commutes, they brought their child to the 4S store during a weekday lunch break to have a meal together. In major cities, auto showrooms are not just places to sell cars—they've become preferred venues for family gatherings, offering charging, dining, and social space. After the reform, with product lines reorganized and technological value replacing price wars to regain market traction, the burden on dealers has objectively eased. Dealers now even have the bandwidth to focus on customer service—a welcome change as BYD shifts from a "communal pot" to a "household responsibility" model.
Wang Chuanfu stated at the shareholders' meeting: "The core of the reform is to break the communal pot. Previously, each brand operated like a sales branch, only responsible for selling without regard for costs. Going forward, they will function more like independent subsidiaries, accountable from product inception through R&D investment to sales—full-chain accounting." The sole exception is Yangwang, which is temporarily exempt from profitability targets; its core mission is to commercialize cutting-edge technologies like Yi Sifang and YunNian. New energy vehicle expert Yang Weibin believes the short-term goal is to address slowing sales growth, intensifying competition, and profitability pressure; in the long term, sub-brands could pursue independent financing and spin-off listings. Under the old model, product and pricing overlaps were rampant; with profit-and-loss responsibility, differentiation will be forced. He revealed that Dynasty will focus on family-oriented vehicles, Ocean on younger demographics, Denza on business segments, and Fangchengbao on off-road. Professor Ji Xuehong from North China University of Technology judges the reform as "more beneficial than harmful," noting that clearer objectives, more defined resource allocation, and sharper accountability will enable operations to revolve around market demand.
Based on the current state of the reform, BYD has modestly improved its core high-inventory problem. Conversely, if BYD had continued with centralized control, the engineering academy would keep bearing cross-brand scheduling and resource arbitration—the larger the scale, the longer the decision chain. Yet a complete split of foundational R&D would sacrifice advantages in batteries, platforms, and supply chain scale. Thus, it must adopt a "decentralized front-end, centralized back-end" approach. The reform's intensity risks going too far, requiring internal balancing by BYD. It's worth noting that BYD's overseas brands were previously so fragmented that they caused redundant construction; hence, the company has now adopted a "One BYD" slogan abroad for brand consolidation. Decentralizing domestically while integrating overseas may seem contradictory, but the core logic is adapting to the times: unify when attacking markets, diversify when defending them to reduce internal friction. A binary black-and-white view is insufficient to judge a giant's strategic deployment.
Why must Geely consolidate?
Geely's core issue lies in past brand silos, where backend operations, R&D, and resources were duplicated, keeping costs stubbornly high. Consolidation is essential to spread costs and improve profit margins. In fact, Li Shufu has been championing the "One Geely" slogan since 2024, implementing closures, mergers, and transformations across internal brands. Over two years, GEELY AUTO has significantly improved profitability by integrating sales resources, unifying brand R&D, and consolidating Zeekr and Geely brand assets. The 2026 interim report shows total revenue up 15% year-over-year, with revenue per vehicle rising 16%.
On August 17, 2026, GEELY AUTO announced that Li Shufu had resigned as Chairman of the Board and Executive Director of Geely Automobile Holdings Limited, taking on the role of Lifetime Honorary Chairman while continuing as Chairman of Zhejiang Geely Holding Group. An Conghui has succeeded as Board Chairman and will lead the new board to strengthen corporate synergies and solidify "One Geely." At the interim results briefing, Li Shufu stated, "The automotive industry is a marathon without a finish line. Corporate succession and value orientation determine a company's sustainable development capability." Earlier, on June 12, he had already stepped down as Zeekr's chairman. This is not Li Shufu's "exit" but a deliberate extension of "centralizing power"—handing daily operations of Geely Automobile Holdings entirely to An Conghui precisely to turn "One Geely" from strategic consensus into governance reality. This personnel upheaval also reveals the real challenges Geely currently faces.
Geely's cost control issues are fundamentally different from BYD's—they stem not from coordination costs but from redundant construction across brands, R&D, and channels. In June 2026, Li Shufu further stated at the Chongqing Forum that the company would "orderly close, merge, and transform redundant entities, concentrating superior resources to strengthen the core listed platform." In August, Geely established a unified sales corporation, bringing all six brand marketing systems—China Star, Galaxy, Lynk & Co, Zeekr, and others—under one command. Now, Li Shufu's resignation from the Geely Automobile board chairmanship and An Conghui's assumption of the role to solidify "One Geely" represent the latest link in this integration chain.
The core of past redundant construction was visible in both R&D and channel ends. Zeekr has invested heavily in three-electric (battery, motor, electronic control) technology, but if that technology serves only Zeekr, limited scale prevents cost dilution, making product pricing uncompetitive. The six brands' independent marketing systems not only caused massive duplicate marketing expenditures but also confused consumers about brand positioning. Geely's integration essentially opens up all backend operations, R&D, and resources, using scale to spread costs. The results are already visible in the data: in the first half of 2026, Geely Holding's global sales reached approximately 1.935 million units, a record for the period; GEELY AUTO's total revenue exceeded RMB 170 billion, up 15% year-over-year, with core net profit attributable to shareholders reaching RMB 9.68 billion, up 46%; core net profit per vehicle rose 45% year-over-year to RMB 6,806. However, "pulling the fist back" is to strike harder—the integration process comes with growing pains. In the first seven months of 2026, Geely brand (including Galaxy) sales fell 4%, and Lynk & Co fell 11%.
In our view, Geely's multi-brand strategy did help it expand territory, but as the market enters a stock competition phase, the "more children, more fights" model has exposed severe resource waste. From Li Shufu's Taizhou Declaration to the establishment of the sales corporation, and now his resignation from the Geely Automobile board chairmanship in favor of An Conghui, a clear path from strategic integration to governance integration is emerging. But integration is never accomplished with a single decree. The "legacy" of the multi-brand era won't disappear automatically: rebalancing dealer interests during channel consolidation, precisely controlling each brand's price boundaries, and merging post-merger organizational cultures all require time to digest. Whether Zeekr, Lynk & Co, and Galaxy can truly establish irreplaceable competitiveness within their respective price bands and customer bases—rather than jumping from one internal-friction trap into another quagmire of blurred positioning—will be the ultimate test of integration's success. Geely has completed the "physical integration" of its organizational structure, but the "chemical reaction" is only just beginning. For instance, if Geely continues allowing each brand to independently build R&D and channels, Zeekr, Lynk & Co, and Galaxy's current scales remain insufficient to dilute investment; yet if brand positioning is also fully centralized, it risks reverting to a big, blurry Geely. Thus, it needs "centralized back-end, decentralized front-end."
How should the reform outcomes be evaluated?
It's clear that BYD and GEELY AUTO are not simply one dividing and one uniting—they are re-cutting power at different levels: BYD decentralizes the front-end while keeping the back-end unified; Geely centralizes the back-end while the front-end still requires differentiation. Interpreting purely through sales figures could easily mislead. We recommend using the following four core metrics to assess the quality of both reforms.
1. Whether per-vehicle profit improves. This is the ultimate indicator of whether "cost reduction" has been achieved. Before the reform, BYD's per-vehicle profit in Q1 2026 was low, with the cost pressure of the communal-pot model directly reflected in its income statement. After decentralization, whether each brand's independent accounting can reverse the per-vehicle profit decline through precise cost control will be the most direct touchstone of reform effectiveness.
2. Whether product efficiency improves. An industry supplier told us, "The unified mega-research-institute model was efficient during the growth phase, but under a multi-brand matrix, it struggles to accommodate differentiated needs, with lengthy processes and blurred accountability." They cited an example: a Fangchengbao model team wanted to use the latest YunNian-Z technology, but the engineering academy replied with a "three-month wait." The brand lacked authority to quickly adjust the product, only recovering through passive price cuts later. After decentralization, this situation is changing. The Denza team decided to add a HUD to the D9's interior, bypassing the engineering academy queue by directly signing with a supplier, securing the market window early. Take the Qin L as an example: from inception to launch took about 24 months; with R&D decision-making power devolved, brands can now independently decide configuration iterations based on market demand, potentially compressing the cycle further. On the Geely side, after integrating Zeekr and Lynk & Co, official estimates suggest R&D investment can be reduced by 10%–20% and material costs by 5%–8%. In April 2026, Geely established "Geely Technology Europe," planning to compress the launch interval between China and overseas markets to within six months—with integrated R&D resources, global synchronized development capability is accelerating.
3. Whether channel health improves. BYD's channel pressure before the reform was severe. In April 2026, the national auto dealer composite inventory coefficient rose to 1.89, up 34% year-over-year, with BYD among the brands with the highest inventory depth. After the reform took effect, changes began to emerge: BYD established an inventory circuit-breaker mechanism—halting shipments when exceeding warning thresholds—while simplifying SKUs, cutting single-model configurations from four to five down to two to three. Channel inventory turnover shortened by nearly three weeks after policy implementation. The dealer inventory coefficient fell to 1.63 in May, down 13.8% month-over-month, and further to 1.58 in June. Main-model terminal prices have gradually stabilized, and channel inventory structure continues to optimize. After decentralization, brands now have the power to define products autonomously, theoretically enabling true differentiation: Dynasty for family use, Ocean for youth, Denza for business, Fangchengbao for off-road. But whether price band overlap has actually decreased requires time to verify—product definition and R&D cycles mean reform effects won't appear overnight. Geely has already taken concrete action here: post-integration, Zeekr is positioned as a luxury tech pure-EV brand with a starting price of RMB 300,000; Lynk & Co targets the RMB 200,000–300,000 mid-to-high-end market, with the Lynk & Co 900 priced up to RMB 345,800, deliberately avoiding Zeekr 9X's RMB 400,000+ range. This "each in its place" pricing strategy is a direct manifestation of integration eliminating internal friction.
Per-vehicle profit, R&D efficiency, new-model cycle, channel health, and price differentiation form a complete reform audit framework. They don't rely on sales narratives but directly address organizational efficiency's essence: Have costs fallen? Has speed increased? Has internal friction decreased? The Q3 2026 earnings report and second-half new product cadence will provide the first answers to these metrics.
Final thoughts
It's not just BYD and GEELY AUTO racing to transform. Facing a persistently declining domestic auto market, mainstream players are all choosing to split or merge in response: Li Auto has simultaneously split key product department functions into its R&D division; Great Wall Motor has centralized overseas decision-making authority at the group president level; Changan has implemented the most thorough decentralization, splitting overseas operations by region; SAIC has formed an integrated "Mega Passenger Vehicle" division. An industry consensus is forming—the competitive focus has shifted from product launches to organizational efficiency, channel quality, and global capability as a combined contest. Automakers are all dividing and uniting according to their core needs. Coase's transaction cost theory holds that a firm's boundaries depend on the comparison between internal organizational costs and market transaction costs. BYD's "split" stems from internal coordination costs becoming too high at 4 million units of scale, causing product and channel overlap, making it better to let each brand decide independently. Geely's "merge" is because the duplicate investment and internal friction from multi-brand decentralized operations have exceeded the management costs of unified integration. The core value is reshaping corporate efficiency to achieve high-quality development. And efficiency's ultimate purpose is to allow companies to deliver better products and services to the market at lower cost and faster speed.
In the end, whether dividing or uniting, the market doesn't care about organizational structures—it only cares whether the cars drive well. Thus, making organizational efficiency serve products and users, and ensuring consumers benefit, is the core of all transformation. The golden September and silver October sales season is fast approaching. Each company's market share and the interim results of their reforms will face their ultimate test in these two months.