Problems of the Chinese automotive industry

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alexeva8/PixabayRetail car sales in the Middle Kingdom fell in January and February this year. by almost one-fifth compared to the previous year. Many consumers are avoiding big purchases amid economic uncertainty caused by the pandemic, the war in Ukraine and geopolitical tensions in the region. As soon as China began to withdraw from nationwide subsidies for electric vehicles, companies such as Ford Motor Co., BMW Group and Volkswagen offered big discounts on these types of cars. Ford has slashed the price of its Mustang Mach-E by about $6,000 through the end of April in an online sale. dollars – the standard version of this battery-powered SUV can cost up to 31,000. dollars. The cuts resulted in a short-term increase in demand. According to industry data, only 84 units of this model were sold in China last month (compared to 1,500 units sold in December 2022). A representative of Ford explains that the promotion did not result from the abolition of subsidies, but was caused by the need to sell off stocks. The challenges facing the industry are diverse, and manufacturers and dealers offer promotions not only for electric vehicles. General Motors Co. and the manufacturer Citroën recently lowered the prices of petrol cars. According to Kelvin Lau, an analyst at Daiwa Capital Markets, China’s anti-air pollution policy is the real reason for the promotion. Petrol car dealers have to get rid of about 500,000 cars from their warehouses. vehicles that will not be able to go out on the street in July due to the entry into force of new, more stringent emission standards. No wonder last Thursday that Volkswagen’s joint venture in Shanghai announced that it would cut the prices of as many as 20 electric and petrol models by the end of April, with discounts ranging from around PLN 2,000 to PLN 7,000. dollars per car. Dongfeng Motor Group, a manufacturer of Citroën with its factories in the Chinese province of Hubei, offers discounts on combustion vehicles up to almost PLN 13,000. dollars. Buyers can also receive the keys to a C6 gas sedan from Dongfeng Peugeot-Citroën Automobile Co. for only 18 thousand dollars, or 40 percent. less than the original price. “Some automakers saw very low sales,” said David Zhang, an independent automotive analyst based in Shanghai. “At this rate, manufacturers’ production and dealer networks will collapse,” he predicts. In his opinion, carmakers around the world must reduce both prices and costs to survive, as Tesla has done in the US, Europe and China. As of 2010, China is the world’s largest market for electric and plug-in hybrid vehicles . Although sales of these vehicles have increased by 23% in the last two months. Compared to the previous year, the increase was not enough to compensate for the decline in sales of vehicles with internal combustion engines, which amounted to almost 30 percent. Some electric vehicle makers are holding promotions ahead of the Shanghai Motor Show (next month) where companies are expected to showcase their latest models. According to analysts, the discounts offered now are likely to dampen car sales later in the year.

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