Imagine buying a brand-new car, only to learn shortly after that the manufacturer has gone bankrupt. According to The Wall Street Journal, more than 400 car companies shut down between 2018 and 2023. In 2024, competition in China’s new energy vehicle (NEV) market became even fiercer, leading to the downfall of several brands, including Jidu Auto, despite its decent sales performance.
Jidu Auto had been selling vehicles in the Middle East through its dealer, LEGEND Motors. After Jidu Auto’s bankruptcy announcement, LEGEND Motors’ manager, Saif, urged Baidu and Geely to uphold their commitments and protect the rights of overseas customers.
“We believe Jidu Auto will make a comeback. In the meantime, we assure our overseas customers that we are willing to continue providing after-sales services to keep their vehicles running,” Saif stated.
How Do You Get Your Car Repaired?
Saif’s statement highlights the biggest concern for car owners when an automaker goes bankrupt—after-sales service. Manufacturers often promise lifetime warranties, but these commitments disappear the moment the company shuts down.
To address this, Chinese regulations require automakers to publicly announce production halts or sales suspensions and guarantee at least 10 years of spare parts supply and after-sales service. However, enforcing this rule is difficult.
When a manufacturer goes bankrupt, official service centers either shut down or stop offering support, leaving car owners to rely on independent repair shops—even if their vehicles are still under warranty. Many owners of defunct brands have already filed complaints, citing issues with finding spare parts and getting routine maintenance.
The problem is even worse for brands with a small market presence. Once a company collapses, its suppliers often stop producing parts, making them extremely rare. This forces owners to drive cautiously, worried about breakdowns or accidents. A viral image on social media even showed a car owner with a sign on their rear window reading, “Don’t hit me—no spare parts available.”
To deal with this, many owners turn to second-hand marketplaces, online communities, or local repair shops to source parts. However, NEVs are particularly difficult to repair due to their complex electrical systems, including batteries, motors, and control units. Finding a qualified repair shop is tough, and even if one is available, the shortage of spare parts remains a major issue.
Fortunately, Geely has stepped in to help maintain and service Jidu Auto vehicles, but not all owners of bankrupt brands are this lucky.
Will Smart Features Still Work?
One of the biggest selling points of NEVs is their advanced smart features. However, these features can quickly become a headache when the automaker behind them goes bankrupt. The smarter the car, the more it depends on the company's ongoing support.
Many smart features, such as remote control via a smartphone app and in-car touchscreen functions, rely on cloud connectivity. If the automaker shuts down its servers, essential tools like remote unlocking or pre-cooling may stop working. Autonomous driving features and AI voice assistants, which rely on continuous data transmission, could also become completely unusable.
Additionally, cars equipped with over-the-air (OTA) updates will no longer receive software improvements, leaving their systems outdated. While vehicles that support Apple CarPlay or Android Auto will still allow navigation and music streaming, many Chinese automakers prefer their own in-house systems and don’t include CarPlay. This means that for many NEV owners, the once high-tech touchscreen could become almost useless.
As one owner of a defunct NEV brand put it, “While it doesn’t affect driving, once the car goes offline, my smart NEV feels just like a regular car.”
Will Insurance Be an Issue?
Mr. Z, an owner of a vehicle from a bankrupt brand, initially paid about ¥4,000 ($560 USD) for his first-year insurance. In the following years, his renewal premiums were under ¥3,000 ($420 USD). However, last year, his renewal quote jumped to nearly ¥5,000 ($700 USD). This year, only one or two insurers were willing to cover his car, and the quoted price was even higher than before.
This increase in premiums and difficulty in finding coverage is due to insurance companies’ risk management strategies. Unlike traditional gasoline vehicles, which have more predictable accident rates and repair costs, NEVs present greater uncertainties. Additionally, insurers have noted that NEVs tend to have higher claim frequencies and payout rates, making them a financial risk.
For older vehicles from bankrupt brands, the lack of spare parts makes even minor accidents costly. Industry data shows that the average claim rate for NEV insurance is nearly 85%, while the combined cost ratio exceeds 120%—meaning insurers are losing money on these policies.
Conclusion
The automotive market is highly competitive, and fluctuations will continue to push some automakers out of business. Experts recommend that consumers looking to buy an NEV choose brands with strong sales figures, a well-established market presence, or backing from major corporations. These brands tend to be more stable in the long run.
If your car’s brand goes bankrupt, don’t panic or rush to sell it at a loss—you can still drive and maintain it with the right approach.
Adrian is an Editor. Psychology graduate with over 4 years in the automotive industry, 3 in front of the camera. Occasionally seen at his family owned tyre shop. He will only buy cars that pass the big bottle test.
