Chinese Carmakers’ Margins Shrink to 1.5% as 8.7 Million H1 Sales Fail to Sustain Price War
Updated
Updated · South China Morning Post · Jul 26
Chinese Carmakers’ Margins Shrink to 1.5% as 8.7 Million H1 Sales Fail to Sustain Price War
2 articles · Updated · South China Morning Post · Jul 26
Summary
Net profit on a 100,000 yuan car has fallen to just 1,500 yuan, leaving Chinese carmakers with a 1.5% margin that industry officials say limits further discounting.
Higher raw-material costs and weaker demand are driving the squeeze as purchase subsidies and tax incentives are rolled back, undermining the price-war strategy used to chase buyers.
The 1.5% margin marks a sharp drop from 3.4% in May and sits far below the 6.1% average profit margin reported by China’s downstream manufacturing sectors.
Mainland car sales fell 20.2% year on year to 8.7 million units in the first half, and suppliers warn several smaller automakers could be pushed out by weak sales.