Chinese Carmaker Zotye Auto Faces Crisis with Alleged Violations and Investigations
The mainland Chinese renowned carmaker Zotye Auto is once again facing a crisis. The company is under investigation by the China Securities Regulatory Commission for alleged violations of disclosure laws. Meanwhile, Zotye Auto has been posting losses for seven consecutive years, accumulating losses exceeding 25 billion yuan (RMB), with its asset-liability ratio rising to 98.87% by the end of the first quarter of this year.
According to reports from mainland Chinese media, on the evening of July 10th, Zotye Auto announced that the company had received a “Filing Notice” from the China Securities Regulatory Commission. The announcement did not specify the specific violations in question but mentioned that the company’s production and operations are currently normal and that it will cooperate with the investigation.
Zotye Auto had previously received regulatory warnings regarding information disclosure issues. According to the reorganization plan, the company and its subsidiaries were supposed to repay 30% of the outstanding debt principal by December 21, 2025. However, the disclosure of newly due but unpaid debts totaling 69.4611 million yuan was delayed by over a month until January 27th. In March, the Zhejiang Securities Regulatory Bureau issued a warning letter to the company and relevant individuals.
Before the investigation was launched, there was public conflict within Zotye Auto’s management team. On June 12th, directors Wang Yian, Zhong Yufei, and Xu Mingzhe proposed the removal of Han Biwen, who took office as chairman in January, and nominated Zhong Yufei as his replacement. However, the motion failed to pass with 3 votes in favor and 6 votes against.
A week later, the company’s fifth-largest shareholder proposed the dismissal of the three directors mentioned earlier. Xu Mingzhe later resigned, and Wang Yian and Zhong Yufei were dismissed by the shareholders’ meeting on June 29. The following day, Wang Yian resigned from his position as vice president of the company.
Media reports citing internal sources within the company suggest that the two conflicting factions have differing opinions on the company’s future business direction. One side advocates for resuming independent car manufacturing and expanding into international markets, while the other leans towards abandoning significant investments in independent research and development, opting to utilize existing production qualifications and capacity for contract manufacturing.
Zotye Auto reached a sales volume of approximately 330,000 vehicles in 2016. However, starting from 2019, the company has been in a seven-year streak of losses, accumulating over 25 billion yuan in losses and even undergoing bankruptcy reorganization at one point.
In 2025, Zotye Auto’s operating income was 521 million yuan, a 6.66% year-on-year decline; with a net loss of 367 million yuan and an asset-liability ratio of 96.54% at year-end. The company’s annual report stated that in that year, the complete vehicle business was essentially at a standstill, with the main income coming from auto parts and door-related business.
As 2026 progresses, the company’s operations continue to face pressure. In the first quarter, operating income decreased by 24.29% year-on-year to 74.7619 million yuan, resulting in a net loss of 82.0999 million yuan. The net assets attributable to shareholders of the listed company at the end of the quarter were only 32.6998 million yuan, and the asset-liability ratio further rose to 98.87%.
The complete vehicle business has also been stagnant for an extended period. From 2022 to 2024, Zotye Auto’s production volumes were 524, 1108, and 0 vehicles respectively, with sales numbers of 502, 1112, and 14 vehicles. The company’s 2025 annual report showed that the complete vehicle business was essentially idle that year, with revenue mainly coming from auto parts and door-related businesses.
As Zotye Auto seeks to resume full vehicle production, the pricing wars in the mainland Chinese automotive industry persist. Car manufacturers continue to engage in price reductions and promotions, while new energy vehicle brands accelerate their expansion. Traditional struggling car companies face greater pressures in terms of technology, funding, and sales channels.
Industry data indicates that in the first five months of 2026, the profit margin of the mainland Chinese automotive industry was only 3.4%, hitting a recent low. The inventory alert index for automobile dealers in June stood at 57.2%, still above the 50% threshold, indicating that the inventory pressure of dealers has not yet eased.
Amid weakening job and income expectations and cautious consumer spending trends, the competition in the automotive market intensifies. For Zotye Auto, which has been experiencing continuous losses, high debts, and unstable recovery in full vehicle production, the main challenges it faces remain how to secure funds, expand sales volume, and restore sustainable operational capabilities.
As of the close of trading on July 10th, Zotye Auto’s stock price was 1.78 yuan per share. Although it rose by 4.09% that day, the cumulative decline since the beginning of the year was 49.58%, almost half of its value lost.