Driven by an extended price war and plant overcapacity, GAC (Guangzhou Automobile Group) and JAC (Anhui Jianghuai Automobile Group Co., Ltd) are expected to post their biggest ever second-quarter losses according to a report published by Reuters.
GAC expects its quarterly loss to widen to between 1.1 billion yuan and 1.9 billion yuan (USD 153 to 265 million) from 731.6 million yuan in the first quarter, according to a stock filing. That compares with a 296-million-yuan profit in the second quarter of 2024.
An expected first-half loss of up to 2.6 billion yuan would be GAC’s biggest six-month loss since listing in 2010 and was attributed in part to its new EV and plug-in hybrid models failing to meet sales goals, as well as the on-going price war.
Meanwhile, the JAC Group expects a net loss of 457 million yuan in the second quarter, more than double its first-quarter loss and compared to a 195.3-million-yuan profit in the second quarter of last year, according to a separate stock filing.
Contributing to the decline is JAC’s EV and plug-in sales which have slumped 35 percent, accounting for just 4.4 percent of its overall first-half sales.
Export-reliant JAC said its export business was in decline due to “an increasingly complex international situation and intensified competition in overseas auto markets.”
Still, JAC is still ramping up production capacity for its high-end EV project, the Maextro S800. Co-developed with Huawei, it’s the most expensive EV released under Huawei-led automotive alliance’s HIMA (Harmony Intelligent Mobility Alliance).
State-owned automakers such as GAC and JAC are generally struggling more than private companies such as BYD, Geely, and Great Wall. Many are resorting to teaming up with Huawei to launch new brands and develop new EVs to try to tap into the tech giant’s technologies and brand halo.
Who will survive this crazy price war??? Who will fold first???
ReplyDeleteWho's next?! You decide! Epicrapbattlesofhistoweghhh!!
DeletePurged by comrades strategies of decimate then dominate. Some comrades even selling below production cost. its now law of the jungle price war
ReplyDeletethis is really a suicide move, same as all chinese cars
ReplyDeletethey will eventually collapse without the CCP support
lower price -> residual value drops -> less people buy -> even lower price -> less profit
The more competition , the more improve in quality , in specifications , in service by those branded Chinese cars.
DeleteUnlike the japanese car in Ph, mostly new model from previous version, the only improvement is facelift, but same or little add spec with price increase.
Masyadong pinoy yung mindset na malaking importance binibigay sa resale value. Iba mag isip ang buyers sa kanilang market (not that there aren't buyers that think that way pero on the whole hindi sila ganun). Hindi kasi sila big spenders, so if they want to buy a car they choose the cheaper option just to be able to gain the mobility and benefits of having a car because they don't look at cars as an investment that they plan to get most of their money back in the future, instead they prefer real estate (which is a whole other story lol) as their main investment vehicle.
DeleteAlso, the lower price making less people buy is not how markets (and capitalism) works (BYD has shown/reported that the dropping of their prices have definitely increased their sales -of course not with the same margins anymore). Interestingly, as said in the last paragraph of the article, the state-owned companies (like GAC) are struggling more than the private companies (BYD, Geely, and Great Wall) so your statement about needing CCP support might not be the case.
Those losses are cheap change for the CCP
ReplyDeleteParang Cola Wars in India lang din,cheaper by 50% Campa vs Coke and Pepsi
Deserve!
ReplyDeleteWhat price war? GAC, JAC, BYD and etc are sold at almost 2x of its price in China.
ReplyDeleteThe price war is happening inside the chinese market. It's a complicated situation, being a mix of oversupply (due to the sheer number of manufacturers) and the fact that the average chinese buyer is not what you call a 'spender'. For some context about the spending habits of the average chinese you can watch the video "China’s Debt Problem Is 300% Bigger Than America’s" from the channel Economics Explained on youtube (timestamp 11:24 if you don't care to watch the whole thing). As a result of this, and back to the price war, the demand for cars is just so much lower despite having such a massive market so the price follows. But now, with the supply being so much that the national government was not able to prevent this (this is also due to intense competition from local/regional governments who are each investing/wanting to have local manufacturers for jobs, tax revenue, etc.), the sheer oversupply vs the lower demand/spending habits have created a situation where sellers are taking a minor-major loss to get at least some return on their cars. People who's job it is to forecast these situations almost surely saw this coming. I have a personal theory that BYD made an early decision predicting this would happen and then pulled the trigger first to sell low so it makes it seem that they caused this when in fact the market was trending this way for years na. In the Philippines, hindi pa natin masyado ramdam because if we pay full price for japanese cars we will happily pay 2x the China price and still come out as winners so there's no incentive, yet, for them to lower their prices for us even more. But if this happens for a few more years we might see some benefit from it (at the loss of other car manufacturers).
DeleteSome are smarter than others.... import the unused second hand car and sell it here like brand new.... Suckers are everywhere.
Deletewho import unused 2nd hand car sell as brand new? give name to proof your words.
Delete