"No Test Takers Left"... China’s Population Decline Puts Driving Academies on the Brink of Bankruptcy

Cold Wave Hits Chinese Driving License Academies
Lowest Figures Recorded in a Decade

The Chinese driving license academy industry, which once flourished with heavy foot traffic, is now facing a severe downturn.

According to local media outlets such as China National Radio on August 16, the number of newly issued driving licenses in China last year was about 20.51 million, down 1.75 million from the previous year. This is the lowest figure in a decade.

A cold wave has swept through the Chinese driving license school industry, which once attracted large crowds. Photo to aid in understanding the article. Pexels.

Competition Intensifies Due to Oversupply

The Chinese Transportation Association and other organizations analyzed in their "China Driving Training Industry Development Report" that the driving academy market has entered a downward phase, leading to a worsening oversupply. In fierce competition among academies, smaller institutions struggle with shortages of instructors and facilities, and in an effort to cut costs, they reduce practice sessions, resulting in a decline in education quality. This has led to increasing consumer dissatisfaction and further market deterioration.

In addition, regulations on driving education announced by the State Administration for Market Regulation in May this year mandate the introduction of new energy vehicles (electric vehicles) and specify vehicle replacement requirements, making the market outlook even tougher. Because academies are now required to replace vehicles, adapt their training, and invest additional education hours, they are trapped in a vicious cycle where student enrollment declines, but lowering tuition fees is not a viable option.

Low Birth Rate's Impact Strikes Driving Academies

A cold wave has swept through the Chinese driving license training industry, which once flourished with a constant stream of customers. Photo to aid in understanding the article. Pexels.

China National Radio, citing data from the Ministry of Public Security, reported that "the impact of declining birth rates is extending to driving academies," noting that "the key demand group—young people aged 18 to 25—has been shrinking every year." As of the end of last year, China's total population was 1.40458 billion (with 7.92 million births and 11.31 million deaths), resulting in a decrease of about 3.39 million compared to the previous year. Nationwide, the population aged 15 to 59 is still estimated at 860 million.

An instructor at a driving academy commented, "Most of our training targets high school graduates, but with the younger generation shrinking each year, the number of students inevitably goes down."

"A Driver's License, Not a Necessity but a Choice"

The change in core consumer generation is another major factor. Experts agree that a driver's license, once deemed essential, is now seen as optional, especially among the younger generation. It has been found that millennials and Gen Z, particularly those born after the 2000s, tend to favor practical spending, leading many to delay or altogether forgo obtaining a license. The key reasons are that learning to drive is no longer perceived as crucial for travel or daily life.

Additionally, as subways and city buses have become more developed in major cities, more people feel they simply do not need to drive. Li, a resident of Guangzhou, shared that she recently sold the SUV she bought a few years ago, saying, "Taking the subway or a taxi is much more convenient and economical than the cost of maintaining a car."

Qiu Dongshu, secretary general of the China Passenger Car Association, forecast that this trend will peak around next year. From 2030 onward, supply and demand are expected to balance out. During this transition, the scale of the driving academy market is predicted to shrink by 25 to 35 percent, with market concentration increasing among leading players. The industry is now accelerating efforts to cut costs with AI and smart technologies while also enhancing education standards and service quality. Media outlets reported, "To attract young students who value consumer experience, academies are improving tuition fee transparency, customer service, and speeding up the process of obtaining licenses."

Meanwhile, the number of births in China last year fell to a record low of 7.92 million, with the total population declining for the fourth consecutive year. With falling marriage and birth rates in recent years, challenges from a decreasing and aging population have become more pronounced, raising concerns around the sustainability of economic growth. In response, the government has been implementing policies such as extended marriage leave, cash handouts, consumption coupons, and relaxed regional restrictions for marriage registration to encourage marriage and alleviate the economic burden of child-rearing. Nevertheless, experts believe this downward population trend will be difficult to reverse. Economists and demographers warned in interviews with media, "A shrinking workforce will lower productivity, increase pension and healthcare costs, and could lead to a prolonged slump in domestic demand."

This content was produced with the assistance of AI translation services.