Chinese auto giant and Chairman of Great Wall Motors stated on August 7 that there are instances of unfair competition, fraud, and deception among some car companies in China, suggesting that audits should be conducted on these companies.
According to the Securities Times, on August 7, Chairman Wei Jianjun of Great Wall Motors revealed the chaos in the mainland Chinese auto industry during a video interview. Wei Jianjun believes that some car companies are engaging in unfair competition, fraud, and deception, and he suggested conducting audits on the auto industry, saying, “We will cover the audit fees.”
Wei Jianjun expressed concerns that many consumers have been misled by marketing tactics on the internet that are divorced from reality and engage in mutual denigration, making it difficult for them to differentiate between the quality of products. He questioned when some car companies would stop their shortsighted behaviors of faking and deceiving, and whether Chinese car companies can still progress. He emphasized that companies without the ability to generate profits and innovate will not be able to go far.
Wei Jianjun believes that Chinese car companies should reflect on themselves, adhere to bottom lines, adopt compliance thinking, and prevent vicious internal competition.
In order to capture a larger share of the Chinese auto market, Chinese car companies have been reducing prices and engaging in price wars since the beginning of 2024, leading to a narrowing profit margin for both car companies and their supply chain enterprises. According to the China Association of Automobile Manufacturers, in the first five months of 2024, the profit margin of the auto industry was 5.3%, lower than the average profit margin of 6.1% for industrial enterprises during the same period.
Furthermore, despite the rapid growth in sales of electric vehicles in mainland China, severe losses are still rampant in the industry, making it a challenge for electric vehicle companies to achieve profitability. According to a report from Caixin on July 13, the only electric vehicle companies that are profitable are Tesla, BYD, and NIO.
Regarding the performance of the Chinese passenger car market in the first seven months of this year, the China Association of Automobile Manufacturers noted that the significant promotional activities in the first half of the year have disrupted the normal price trend of the car market, and it will take some time for terminal prices to adjust. The overly aggressive promotions in the second quarter have resulted in an overdraft effect on consumer spending in the second half of the year, weakening the effect of “price for volume” in July.
Data released by the China Association of Automobile Manufacturers on August 7 showed that in July, retail sales of passenger cars in China reached 1.729 million units, a 2% decrease compared to the same period last year and a 2% decrease from the previous month.
The China Association of Automobile Manufacturers stated that while sales status was relatively normal at the beginning of July, the pressure on sales growth in the latter half of the month has become apparent.
Faced with disorderly competition in the Chinese auto market, Vice Minister of the Ministry of Industry and Information Technology of the Communist Party of China, Xin Guobin, admitted on July 12 at the 2024 China Automobile Forum that the demand for automobiles in China is not strong, and there is intense competition and disorderly competition, which is impacting the stability of the industry and supply chain.