Geely chair says global car industry faces ‘serious over capacity'
Geely's chair and founder Li Shufu said on Saturday the global automotive industry was facing "serious over capacity" and the Chinese carmaker had decided not to build new manufacturing plants or expand production in existing facilities.
Li made the comments at an auto forum in the central city of Chongqing, according to the company. Geely Holding owns many automotive brands including Geely, Zeekr and Volvo.
His comments come as the Chinese car industry, the world's largest, has been locked in a brutal price war that is forcing many players to look to markets abroad and has prompted Chinese regulators to call for a halt.
Chinese carmakers that have been building plants abroad include BYD, Chery and Great Wall Motor.
Geely is planning to use French carmaker Renault's existing production facilities in Brazil and take a minority stake in Renault's business in the Latin American country, according to an announcement it made in February.
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Daily Maverick
an hour ago
- Daily Maverick
Faced with US tariffs China must reform and liberalise its economy
The tariffs are starting to bite. Data out this week showed that China's exports to the United States plunged by 34.4% last month, the sharpest drop since the Covid-19 pandemic, according to Bloomberg. This decline occurred despite the temporary trade war 'truce' announced by US President Donald Trump in May. This precipitous drop is undoubtedly a blow to China's critical export machine. Yet, it underscores a broader and more important economic question: Can China pivot its massive economy away from export-led growth towards a more sustainable model predicated on higher domestic consumption? Underlying the data is the strength of the Chinese export machine. Remarkably, despite the collapse in exports to the US, China's total exports rose nearly 5%. But the bigger challenge lies in transforming the economic model that has driven China's breakneck economic expansion for decades. The call for China to rebalance its economy away from selling to consumers in other countries is not new. Economists have long warned that its reliance on domestic savings funding investment into manufacturing foreign exports is unsustainable. The Trumpian trade war has merely sped up the urgency of its need to make this transition across the economic Rubicon. Scepticism Scepticism is rife as to whether the Chinese Communist Party (CCP) has the means, or political will, to foster such a shift to a consumption-led economy. It would not be without its political and social risks. History has shown that when people become better off, and economically freer, they tend to demand equivalent political freedoms. Yet, the question might not be whether the CCP wants or is able to allow such a shift. Rather, can it afford not to? Surely, it understands that hoping that the status quo can continue is a road to nigh certain economic, social and political ruin. China must, in a sense, evolve or die. And the signs are that it is indeed taking this plunge. First, the narrative of weak domestic consumption is misleading. Consumer spending already makes up about 40% of China's GDP. While this is well below the global average of about 60%, the share scale of China's consumer market — already second only to the US — makes clear the upside potential if it is able to lift consumption to a level commensurate with an economy of its nature. Replacing lost US export revenue with domestic demand then may not be as difficult as it seems. Thanks to high production and relatively low prices, consumer goods are widely affordable, and China is not as susceptible to difficult and fragile supply chains as, for example, the US. Moreover, young Chinese Gen Z and millennial consumers are prone to spend on travel, lifestyle and technology. 'The bulk of consumer credit goes to people under 35,' notes Keyu Jin of Hong Kong University of Science and Technology in the Financial Times. 'With one click on Alibaba, you can borrow to buy a lipstick.' Enormous potential Looking ahead, the potential for consumption growth is enormous. Boston Consulting Group estimates that by 2030, more than 500 million Chinese will belong to the middle and upper classes. That is more than the entire population of the US. Even a modest rise in their spending habits could drive a major increase in domestic demand, and indeed affect other emerging markets that sell to China — such as South Africa. Second is the shifting dynamics of the real estate market. China's zero-Covid-19 pandemic approach and its real estate crash did, undoubtedly, scare households. Consumer confidence remains significantly below pre-2020 levels, and precautionary savings are elevated. Yet, there are nascent signs of a turnaround. Research done by Absolute Strategy Research shows that households have now largely filled the hole in their balance sheets caused by the tanking property market, allowing them more room to spend. Home prices are stabilising, and consumer sentiment is slowly recovering. A recent Deutsche Bank survey showed 52% of respondents were ready to increase discretionary spending, the highest in a year. Still, converting this momentum into long-term consumption growth will require deeper structural changes. Confidence must be boosted and precautionary 'rainy day' savings, which are still so prized by a consumer market enduring post-Covid PTSD — should be depleted. But Beijing is listening to the economists on this. Xi Jinping's economic doctrine — emphasising 'dual circulation' and 'common prosperity' — has begun to prioritise domestic demand. Third, urbanisation is a critical factor. China's hukou system — which restricts rural migrants' access to benefits in urban areas thereby keeping a lid on the numbers of people that can move into the cities — puts a ceiling on consumption spending. But the August 2024 five-year reforms to ease this system could unleash enormous spending potential. Studies show that fully urbanised migrants increase their per capita consumption by as much as 60%. While this is not without its political risks for the CCP — studies also show that urban residents are more likely to prioritise liberal values such as free speech and democracy — it is a necessity for faster growth. Social safety net Finally, China's social safety net also needs strengthening. Beijing spends significantly less on social transfers than capitalist economies, and it collects very little income tax relative to GDP. This underdeveloped welfare system encourages excess savings and lower spending. But once again, despite some political resistance, reforms are being made. While Xi has spoken against 'welfarism' that 'encourages laziness', recent reforms include childcare subsidies, public medical insurance, old age benefits, employment support, and consumption incentives. While not enough, this is an impressive start, and a tacit acknowledgement that more needs to be done to shift the economy to be 'consumption led'. Long-term growth hinges on sustained political and economic reforms. Redirecting household savings into real economy spending by further welfare and tax reforms would strengthen the domestic market and help China make that shift into a more mature consumer economy. As the economic and geopolitical limits of the country's existing growth strategy becomes clearer, China must leverage its centralised policy apparatus to turbocharge consumer spending. 'Beijing has time and again demonstrated the ability to do the unexpected to reach its longer-term goals,' says David Goodman, director of the China Studies Centre at the University of Sydney, quoted in the Financial Times. China's consumers have struggled in recent years. But there is enormous spending power yet to be unlocked, and Beijing holds the key. Whether Beijing has both the means and the will to engineer this shift remains uncertain. But for the global economy — and especially for resource exporting emerging markets like South Africa that rely heavily on Chinese demand — it is a question of enormous consequence. China is still South Africa's largest single export market by far. Unlike Trump, who revels in signs of Chinese weakness, the rest of the world should hope China's economy is more resilient than it appears. DM
IOL News
2 hours ago
- IOL News
New Renault Duster has a cool factor of note, but here's why the Chinese are eating its lunch
The third-generation Renault Duster has a more confident appearance. Image: Supplied I always admired the Renault Duster and its no-nonsense approach. Amid seemingly every other manufacturer's efforts to gentrify the SUV, the Duster stood out as an egalitarian hero. Created in Romania by Renault's Dacia brand, the original Duster was designed to be one of the most affordable SUVs in the world. It was the kind of vehicle you could throw the dogs into without worrying about scratches on the diamond-stitched faux Nappa leather, or embark on any adventure of your choice without too much concern about how your muddy gear would ruin the cabin. It also had an extremely frugal 1.5-litre diesel engine, which was gutsier than its outputs suggested. The second iteration of the Duster was very much a rinse and repeat of that and now we have the third-generation model in local showrooms. At 4,343mm, the new Duster is slightly longer than its predecessor. Image: Supplied It's actually quite a looker in my opinion. You might have accused the first two of being a little bland, but this latest redesign has given it some attitude. As a result it appears really comfortable in its own skin and confident in its brand identity. There are two problems, though. Gone is the diesel, which is not too surprising, given how European manufacturers have largely abandoned this engine type at the lower end of the market due to emissions laws. But it's not very affordable anymore, with the 1.3-litre turbopetrol Zen priced at R489,999 and the 1.3T Intens listed at R519,999, while the 1.2T mild hybrid manual 4x4 that we tested recently costs R549,999. By comparison, the similarly sized Chery Tiggo Cross is priced from R399,900 to R449,900, while the Haval Jolion Pro costs between R391,150 and R519,950, the latter as an ultra-luxurious genuine hybrid. Even the larger Toyota Corolla Cross is somewhat more affordable, with its window stickers ranging from R414,800 to R561,700. By all means, the spirit of the original Duster is very much inherent in the latest version, as it feels hardy and very well put together. Practical cabin The cabin has a pleasant design and is practical and user-friendly, now featuring a larger 10.1-inch infotainment screen and 7.0-inch digital instrument cluster. But there are some strange omissions, such as the lack of volume knob, meaning adjustments must be made via controls on the side of the steering wheel or via small buttons on top of the touchscreen. The new cabin boasts a neater design but the materials are still of the cost-cutting variety. Image: Supplied But the interior plastics mostly appear to be of the cost-cutting variety, and our test car creaked and rattled occasionally while driving. One redeeming feature was the powertrain. The 1.3-litre turbocharged petrol engine, which is paired with a 48-volt electrical system, feels sophisticated and refined. Particularly when compared to its Chinese rivals, which still feel a little rough around the edges when it comes to drivetrain refinement. Comparatively, the Duster is also fairly economical, with our on-board readout showing 8.2 litres per 100km after a few days of purely urban driving. The manual gearbox did feel somewhat notchy, and we feel that buyers in this segment would surely prefer an auto. Thankfully, the 1.3T non-hybrid Duster models do feature a seven-speed dual-clutch autobox. It's decent off the beaten track The Duster does have an ace up its sleeve for those who want to venture off the beaten track. The option of four-wheel drive is quite rare in this segment, and although it's not a 'proper' off-roader like the Jimny, the Duster 4WD will still tackle far more challenging terrain than your average urban SUV. The ground clearance of 217mm is certainly generous, and the 4WD Terrain Control system offers five modes, these being Auto, Snow, Mud/Sand, Off-Road and Eco. It also has downhill speed control for those steeper slopes, although the somewhat innovative 'low' first gear on the earlier Dusters, which mimicked low-range to a degree, is no longer there. What you get as standard In order to keep pricing from being even higher, Renault offers the 4WD in Zen trim only, but it is more luxurious than the name implies. Standard features include 17-inch diamond cut alloy wheels, modular roof bars, 10.1-inch touchscreen infotainment system with Wireless Smartphone Replication, 7.0-inch digital instrument cluster, reverse camera, automatic climate control, auto wipers and six airbags. For the record, the Intens spec specification grade (2WD only) adds to that 18-inch diamond cut alloy wheels, 360 View camera, wireless phone charging, Arkamys 3D sound system and an advanced Driver Assist system (ADAS) that includes Blind Spot Detection. VERDICT In 4WD form the new Renault Duster does have a unique selling point in its off-road ability, and it has the cool factor to match, with its stylish new design, while the cabin is suitably practical and feels durable. But it has become somewhat more expensive, and in this age of cut-price Chinese SUVs that offer oodles of luxury, the Duster simply feels a bit out of touch. Which is a pity, because it is still a very likeable vehicle. But it's not necessarily Renault SA's fault, as importing vehicles from Europe has become really expensive. One potential silver lining is that the Duster is expected to go into production in India from 2026, and if the local importer is able to source from there at a more competitive price at some point in the future, the Duster could certainly find itself back in the game!
IOL News
4 hours ago
- IOL News
Driving impressions: the Citroen C3 1. 2T Max is a budget-friendly contender in a busy segment
The Citroen C3 1.2T Max hatchback with its black trim has a crossover appeal about it. Think Citroen and immediately it conjures up images of quirky French designs and fantastic suspension, especially in the iconic DS. They've had a couple of clangers along the way but generally they're very good cars. South Africa has a checkered history with the brand, now under the Stellantis banner, with the manufacturer withdrawing in 2016 and then returning again in 2019. Made in India It's also been a mixed bag when it comes to sales, in part because of our disastrous exchange rate to the Euro that made it difficult to challenge manufacturers importing from China and India. This was especially so for the Citroen C3 that was outpricing itself in the market but Stellantis was aware of its potential in the budget market, so made the call to bring in the Indian-built model. It proved to be a wise decision and the C3 is one of Stellantis' top sellers and now competes against the likes of the Hyundai Exter, Mahindra XUV 3XO, and Nissan Magnite. We had the range-topping Citroen C3 1.2T Max on test and came away suitably impressed, considering the segment it plays in. Exterior There's nothing outrageously French about the design, preferring instead a more sober look. The black trimmings around the base of the doors and window frames, faux skid plate, 15-inch alloys, roof-rails and the Citroen chrome double chevron give it a bit of a crossover look and appeal. Engine It's powered by the group's tried and tested three-pot 1.2-litre turbocharged engine delivering 81kW and 205Nm mated to a six-speed automatic transmission connected to the front wheels. Small naturally aspirated engines in some of the competitors tend to wheeze at up-country heights so that turbocharger is a boon for highveld owners.
