Foreign automakers in China with annual sales of fewer than 300,000 vehicles face a high risk of exiting the market, with up to an 80percent probability of withdrawal and at least four companies expected to leave in the coming years, according to a new industry report.

Carmakers—both wholly foreign-owned and joint ventures—that sell between 100,000 and 300,000 units a year face a 50percent to 80percent likelihood of exit, with four to five departures anticipated, the report released on Tuesday by think tank China EV100 said. Automakers with annual sales of 300,000 to 600,000 units face a lower, but still significant, 20percent to 50percent chance of leaving, with two to three exits considered likely.

The probability of market exit is closely linked to scale, the report said, as intense competition and rapid electrification squeeze smaller players. More than 45 foreign and joint venture automakers currently operate in China, accounting for about 40percent of passenger vehicle manufacturers in the world’s largest auto market.

Several joint ventures are already operating at marginal scale. Dongfeng Peugeot-Citroën, Chery Jaguar Land Rover, Smart Automobile, Changan Lincoln, Changan Mazda and Jiangling Ford each sold fewer than 100,000 vehicles over the past year, according to insurance registration data cited in the report.

China’s auto market has undergone a sharp structural shift in recent years, with domestic brands gaining ground as foreign competitors lose share. Local automakers accounted for 65percent of passenger vehicle sales in the first 10 months of this year, up from 36percent in 2020, while the share held by foreign brands fell to 35percent from 64percent over the same period.

As the industry consolidates, some foreign automakers have already exited China. Japan’s Suzuki Motor and Mitsubishi Motors have withdrawn from the market, underscoring the mounting challenges facing smaller and less competitive players.