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The Star
4 days ago
- Automotive
- The Star
China auto price war fuels industry shakeout fears
AN intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Shares of China's largest automakers sank on Monday after Chinese electric-vehicle (EV) giant BYD offered fresh discounts across more than a dozen models, and an executive at another car company fretted openly about the country's deepening price war. BYD's moves cut the starting price of its cheapest model, the battery-powered Seagull hatchback, to 55,800 yuan (US$7,765), from nearly US$10,000. The BYD price cuts, along with other developments, signal a potential tipping point, where weaker players can no longer sustain deepening losses from the downward spiral on prices, said Tu Le, managing director of Sino Auto Insights, an advisory firm. 'This points to a bloodbath later this year,' he said. 'This could be the first domino that would finally put pressure on weaker players – startups like Neta and Polestar – that have been teetering.' Last Friday, the chairman of Great Wall Motors, Wei Jianjun, warned that China's auto sector was in an unhealthy state, with pricing pressure hammering the bottom lines of car companies and suppliers. He even drew a parallel to Evergrande, the Chinese property developer that was liquidated last year after a major debt crisis. 'Now, Evergrande in the automobile industry already exists, but it has not collapsed,' he told Sina Finance in an interview. In another sign of stress in the market, Reuters reported that Chinese commerce regulators are examining a growing phenomenon that has also strained the industry: sales of 'used cars' that are essentially new cars with zero miles. The tactic is seen as a way for automakers and dealers to hit aggressive sales targets, a person familiar with the matter told Reuters. A slew of startup companies have piled into China's car market over the past decade, drawn by the burgeoning EV sector. The market has grown crowded with cut-throat price competition and most companies sustaining heavy losses. Of the 169 automakers operating in China today, more than half have less than 0.1% market share, according to data from research firm Jato Dynamics. The crowded field is reminiscent of the US auto sector in the early 20th century, when more than 100 companies vied with big players such as Ford, before the industry consolidated. Le said the price war has lasted roughly three years. Carmakers once enjoyed a premium for advanced features such as driver-assistance systems that take control of steering and braking in certain situations, but now more have been offering these as part of the sticker price. Last week, China's state planner cautioned that competition in some industries was getting too heated, with some companies even selling their cars below cost, disrupting fair competition. Last Friday, Wei, the Great Wall chairman, warned the prolonged price war was harming the automotive supply chain. Some suppliers are at risk of going under because of pressure from car companies to lower their prices, he said. 'Some products have been reduced from 220,000 yuan to 120,000 yuan in the past few years,' he said, without naming companies. 'What kind of industrial products can be reduced by 100,000 yuan and still have quality assurance?' Still, predictions of consolidation in China's car market have gone on for years, but the field has only grown, said Michael Dunne, a consultant who closely follows the China auto industry. 'BYD's price cuts will drive out some of the weaker players,' he said. 'But for every casualty here comes a new Xiaomi or Huawei barrelling into the arena.' — Reuters Norihiko Shirouzu writes for Reuters. The views expressed here are the writer's own.
New Straits Times
4 days ago
- Automotive
- New Straits Times
China car market price war stokes fears of industry shake-out
AN intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Shares of China's largest carmakers sank on Monday after electric-vehicle (EV) giant BYD offered fresh discounts across more than a dozen models. Also, an executive at another car company voiced concern about the country's deepening price war. BYD's moves cut the starting price of its cheapest model, the battery-powered Seagull hatchback, to 55,800 yuan, from around 70,000 yuan. The BYD price cuts, along with other developments, signalled a potential tipping point, where weaker players could no longer sustain deepening losses from the downward spiral in prices, said Tu Le, managing director of Sino Auto Insights, an advisory firm. "This points to a bloodbath later this year," he said. "This could be the first domino that would finally put pressure on weaker players — startups like Neta and Polestar — that have been teetering." Last Friday, Great Wall Motors (GWM) chairman Wei Jianjun warned that China's auto sector was in an unhealthy state, with pricing pressure hammering the bottom lines of car companies and suppliers. He even drew a parallel to Evergrande, the Chinese property developer that was liquidated last year after a major debt crisis. "The Evergrande in the automobile industry already exists, but it hasn't collapsed yet," he told Sina Finance. In another sign of stress in the market, Reuters reported that regulators were examining a trend straining the industry: sales of "used cars" that were essentially new cars with zero miles. The tactic was seen as a way for carmakers and dealers to hit aggressive sales targets, said a person familiar with the matter. The Hong Kong-listed shares of BYD Co Ltd closed 8.6 per cent lower on Monday, while Geely Auto fell 9.5 per cent. Others, such as Nio and Leapmotor, closed between three per cent and 8.5 per cent lower. A slew of startup companies have piled into China's car market over the past decade, drawn by the burgeoning EV sector. The market has grown crowded with cutthroat price competition and most companies sustaining heavy losses. Of the 169 carmakers operating in China today, more than half have less than 0.1 per cent market share, according to data from research firm Jato Dynamics. The crowded field is reminiscent of the United States auto sector in the early 20th century, when more than 100 companies competed with giants such as Ford, before eventual consolidation. Le said the price war has lasted roughly three years. Carmakers once enjoyed a premium for advanced features such as driver-assistance systems that take control of steering and braking in certain situations, but now more have been offering these as part of the sticker price. Last week, China's state planner cautioned that competition in some industries was getting too heated, with some companies even selling their cars below cost, disrupting fair competition. On Friday, Wei, the GWM chairman, warned the prolonged price war was harming the automotive supply chain. Some suppliers were at risk of going under because of pressure from car companies to lower their prices, he said. "Some products have been reduced from 220,000 yuan to 120,000 yuan in the past few years," he said, without naming companies. "What kind of industrial products can be reduced by 100,000 yuan and still have quality assurance?" Still, predictions of consolidation in China's car market had gone on for years, but the field had only grown, said Michael Dunne, a consultant who closely follows the China auto industry. "BYD's price cuts will drive out some of the weaker players," he said. "But for every casualty here comes a new Xiaomi or Huawei barrelling into the arena."
TimesLIVE
4 days ago
- Automotive
- TimesLIVE
China car market price war stokes fears of industry shake-out
An intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Shares of China's largest carmakers sank Monday after Chinese electric vehicle giant BYD offered fresh discounts across more than a dozen models, and an executive at another car company fretted openly about the country's deepening price war. BYD's moves cut the starting price of its cheapest model, the battery-powered Seagull hatchback, to 55,800 yuan (R139,596), from nearly $10,000 (R179,779). The BYD price cuts, along with other developments, signal a potential tipping point, where weaker players can no longer sustain deepening losses from the downward spiral on prices, said Tu Le, MD of Sino Auto Insights, an advisory firm. 'This points to a bloodbath later this year,' he said. 'This could be the first domino that would finally put pressure on weaker players, startups such as Neta and Polestar, that have been teetering.' On Friday, the chair of Great Wall Motors, Wei Jianjun, warned that China's car sector was in an unhealthy state, with pricing pressure hammering the bottom lines of car companies and suppliers. He drew a parallel to Evergrande, the Chinese property developer that was liquidated last year after a major debt crisis. " Evergrande in the automobile industry exists, but it has not collapsed," he told Sina Finance in an interview. In another sign of stress in the market, Reuters reported Chinese commerce regulators are examining a growing phenomenon that has also strained the industry: sales of 'used cars' that are essentially new cars with zero miles. The tactic is seen as a way for carmakers and dealers to hit aggressive sales targets, a person familiar with the matter told Reuters. The Hong Kong-listed shares of BYD closed 8.6% lower on Monday, while Geely Auto fell 9.5%. Others, such as Nio and Leapmotor, closed between 3% and 8.5% lower. A slew of startup companies have piled into China's car market over the past decade, drawn by the burgeoning electric vehicle sector. The market has grown crowded with cut-throat price competition and most companies sustaining heavy losses. Of the 169 carmakers operating in China today, more than half have less than 0.1% market share, according to data from research firm Jato Dynamics. The crowded field is reminiscent of the US car sector in the early 20th century, when more than 100 companies vied with big players such as Ford before the industry consolidated. Le said the price war has lasted roughly three years. Car makers once enjoyed a premium for advanced features such as driver-assistance systems that take control of steering and braking in certain situations, but more have been offering these as part of the sticker price. Last week, China's state planner cautioned that competition in some industries was getting too heated, with some companies selling their cars below cost, disrupting fair competition. On Friday, Wei warned the prolonged price war was harming the automotive supply chain. Some suppliers are at risk of going under because of pressure from car companies to lower their prices, he said. "Some products have been reduced from 220,000 yuan (R548,805) to 120,000 yuan (R299,449) in the past few years,' he said, without naming companies. 'What kind of industrial products can be reduced by 100,000 yuan (R249,541) and have quality assurance?' Predictions of consolidation in China's car market have gone on for years, but the field has only grown, said Michael Dunne, a consultant who closely follows the China car industry. 'BYD's price cuts will drive out some of the weaker players,' he said.
Economic Times
4 days ago
- Automotive
- Economic Times
China auto market price war stokes fears of industry shake-out
An intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Shares of China's largest automakers sank Monday after Chinese electric-vehicle giant BYD offered fresh discounts across more than a dozen models, and an executive at another car company fretted openly about the country's deepening price war. BYD's moves cut the starting price of its cheapest model, the battery-powered Seagull hatchback, to 55,800 yuan ($7,765), from nearly $10,000. The BYD price cuts, along with other developments, signal a potential tipping point, where weaker players can no longer sustain deepening losses from the downward spiral on prices, said Tu Le, managing director of Sino Auto Insights, an advisory firm. "This points to a bloodbath later this year," he said. "This could be the first domino that would finally put pressure on weaker players -- startups like Neta and Polestar -- that have been teetering." On Friday, the chairman of Great Wall Motors, Wei Jianjun, warned that China's auto sector was in an unhealthy state, with pricing pressure hammering the bottom lines of car companies and suppliers. He even drew a parallel to Evergrande, the Chinese property developer that was liquidated last year after a major debt crisis. "Now, Evergrande in the automobile industry already exists, but it has not collapsed," he told Sina Finance in an interview. In another sign of stress in the market, Reuters reported that Chinese commerce regulators are examining a growing phenomenon that has also strained the industry: sales of "used cars" that are essentially new cars with zero miles. The tactic is seen as a way for automakers and dealers to hit aggressive sales targets, a person familiar with the matter told Reuters. The Hong Kong-listed shares of BYD Co Ltd closed 8.6% lower on Monday, while Geely Auto fell 9.5%. Others, such as Nio and Leapmotor, closed between 3% and 8.5% lower. A slew of startup companies have piled into China's car market over the past decade, drawn by the burgeoning electric-vehicle sector. The market has grown crowded with cut-throat price competition and most companies sustaining heavy losses. Of the 169 automakers operating in China today, more than half have less than 0.1% market share, according to data from research firm Jato Dynamics. The crowded field is reminiscent of the U.S. auto sector in the early 20th century, when more than 100 companies vied with big players such as Ford, before the industry consolidated. Le said the price war has lasted roughly three years. Car makers once enjoyed a premium for advanced features such as driver-assistance systems that take control of steering and braking in certain situations, but now more have been offering these as part of the sticker price. Last week, China's state planner cautioned that competition in some industries was getting too heated, with some companies even selling their cars below cost, disrupting fair competition. On Friday, Wei, the Great Wall chairman, warned the prolonged price war was harming the automotive supply chain. Some suppliers are at risk of going under because of pressure from car companies to lower their prices, he said. "Some products have been reduced from 220,000 yuan to 120,000 yuan in the past few years," he said, without naming companies. "What kind of industrial products can be reduced by 100,000 yuan and still have quality assurance?" Still, predictions of consolidation in China's car market have gone on for years, but the field has only grown, said Michael Dunne, a consultant who closely follows the China auto industry. "BYD's price cuts will drive out some of the weaker players," he said. "But for every casualty here comes a new Xiaomi or Huawei barreling into the arena."
Time of India
4 days ago
- Automotive
- Time of India
China auto market price war stokes fears of industry shake-out
An intensifying auto industry price war in China has stoked fears of a long-anticipated shake-out in the world's largest car market. Shares of China's largest automakers sank Monday after Chinese electric-vehicle giant BYD offered fresh discounts across more than a dozen models, and an executive at another car company fretted openly about the country's deepening price war. BYD's moves cut the starting price of its cheapest model, the battery-powered Seagull hatchback, to 55,800 yuan ($7,765), from nearly $10,000. The BYD price cuts , along with other developments, signal a potential tipping point, where weaker players can no longer sustain deepening losses from the downward spiral on prices, said Tu Le, managing director of Sino Auto Insights, an advisory firm. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Air conditioners without external unit. (click to see prices) Air Condition | Search Ads Search Now Undo "This points to a bloodbath later this year," he said. "This could be the first domino that would finally put pressure on weaker players -- startups like Neta and Polestar -- that have been teetering." On Friday, the chairman of Great Wall Motors, Wei Jianjun, warned that China's auto sector was in an unhealthy state, with pricing pressure hammering the bottom lines of car companies and suppliers. He even drew a parallel to Evergrande, the Chinese property developer that was liquidated last year after a major debt crisis. Live Events "Now, Evergrande in the automobile industry already exists, but it has not collapsed," he told Sina Finance in an interview. In another sign of stress in the market, Reuters reported that Chinese commerce regulators are examining a growing phenomenon that has also strained the industry: sales of "used cars" that are essentially new cars with zero miles. The tactic is seen as a way for automakers and dealers to hit aggressive sales targets, a person familiar with the matter told Reuters. The Hong Kong-listed shares of BYD Co Ltd closed 8.6% lower on Monday, while Geely Auto fell 9.5%. Others, such as Nio and Leapmotor, closed between 3% and 8.5% lower. A slew of startup companies have piled into China's car market over the past decade, drawn by the burgeoning electric-vehicle sector. The market has grown crowded with cut-throat price competition and most companies sustaining heavy losses. Of the 169 automakers operating in China today, more than half have less than 0.1% market share, according to data from research firm Jato Dynamics. The crowded field is reminiscent of the U.S. auto sector in the early 20th century, when more than 100 companies vied with big players such as Ford, before the industry consolidated. Le said the price war has lasted roughly three years. Car makers once enjoyed a premium for advanced features such as driver-assistance systems that take control of steering and braking in certain situations, but now more have been offering these as part of the sticker price. Last week, China's state planner cautioned that competition in some industries was getting too heated, with some companies even selling their cars below cost, disrupting fair competition. On Friday, Wei, the Great Wall chairman, warned the prolonged price war was harming the automotive supply chain. Some suppliers are at risk of going under because of pressure from car companies to lower their prices, he said. "Some products have been reduced from 220,000 yuan to 120,000 yuan in the past few years," he said, without naming companies. "What kind of industrial products can be reduced by 100,000 yuan and still have quality assurance?" Still, predictions of consolidation in China's car market have gone on for years, but the field has only grown, said Michael Dunne, a consultant who closely follows the China auto industry. "BYD's price cuts will drive out some of the weaker players," he said. "But for every casualty here comes a new Xiaomi or Huawei barreling into the arena."
