What’s new: Cutthroat competition in the face of weakening domestic demand is destabilizing the industrial and supply chains of China’s auto industry, an official said.
The “disorderly competition” is also squeezing Chinese carmakers, many of which have seen their bottom lines suffer, Xin Guobin, a vice minister at the Ministry of Industry and Information Technology (MIIT) said Friday at the China Auto Forum in Shanghai.
In response, the MIIT will fight anti-competitive behavior to regulate the development of the industry, Xin added, without elaborating.
The background: In the first half of 2024, China’s auto sales rose 6.1% to about 14 million vehicles, a drop from last year’s growth rate of about 10%, according to data from the China Association of Automobile Manufacturers.
Meanwhile, the fallout of a brutal price war started by new-energy vehicle (NEV) manufacturers continues to weigh on automakers’ profitability. China’s auto industry had an average profit margin of 5.3% in the first five months of this year, compared with an average of 6.1% of the country’s other industrial enterprises, according to data from the China Passenger Car Association (CPCA).
The weaker growth in first-half auto sales was largely due to a slump in demand for conventional automobiles. CPCA data showed that sales of fossil fuel-powered passenger vehicles fell 13% year-on-year in the first half to around 5.7 million as customers turned more to NEVs.
The sluggishness of China’s overall auto market has prompted automakers to look overseas. China’s first-half auto exports grew 30.5% year-on-year to nearly 2.8 million cars, of which 605,000 were NEVs.
Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
