It is a symptom of the overheated car market in China – brand new vehicles are offered cheap from used car dealers due to overcapacity. The price war threatens to falter the industry.
“This is one of these cars – zero kilometers on the counter!” Used car dealer Wang Jianjun indicates a white Chinese electro-small car in his shop in Beijing. 100,000 yuan, the equivalent of twelve thousand euros it costs as a regular new car. Here in Wang’s shop he is also a factory, but by a third cheaper.
“A new vehicle as a used car – you certainly don’t have that,” says Wang and laughs. “This is only available in China. This is due to the political measures in the auto industry.”
Car manufacturers can do numbers
What Wang means are the many purchase bonuses that the Chinese state distributes to support the auto industry. Some of them are scrappage bonuses where you can exchanged old cars for new ones. Sometimes local governments are shooting additional money or there are discounts from the factories.
Traders such as Wang collect these grants, buy a new car and offer it cheaper. “I don’t really like such tricks,” says Wang. “But what should I do? The business is not going well. I have to survive. Others do it too – money doesn’t stink.”
Many car manufacturers play this in the cards. With such shops you can do your sales in front of investors and banks, even if the cars sold are in a used car shop. It is a symptom of the overheated car market.
Award fight, especially on the domestic market
The communist leadership set the establishment of an electric car industry years ago – and distributed government aids. Many new manufacturers have been created, more than 100 are now available. Many are innovative, have developed modern models according to the taste of Chinese customers, some major have effective supply chains for e-car production, of which German manufacturers now also learn a lot.
A side effect is, however,: there are now too many car manufacturers who produce far more vehicles than are in demand. The result is a price war, especially on the domestic market. It has become so violent that many experts ask themselves who can still earn money at these prices.
A new ever -grand?
In spring, numerous large manufacturers had announced a further 30 percent discount on their vehicles. For the head of the Chinese car company “Great Wall”, Wei Jianjun, it was the last drop that caused the barrel to overflow. China’s entrepreneurs are usually careful with public statements. It is all the more remarkable that he openly criticized competitors and compared the state of the auto industry with the real estate industry.
It had already slipped into a violent crisis years ago after too much was built – the economy has not recovered to this day. In allusion to the insolvent Chinese real estate giant Evergrande, Wei said that there was also an “ever -grand” in the automotive industry, but it has not yet collapsed. Weis competitors vehemently rejected the back.
Suppliers are waiting for their money for a long time
Another symptom for the crisis: Many suppliers of the Chinese car manufacturers have to wait a long time for their money. “At the moment it takes about six to eight months before the suppliers are paid. The outstanding in the industry is around 400 billion yuan,” says the expert of the association of car dealers, Li Yanwei. That is the equivalent of around 50 billion euros, for which the suppliers have to wait even though their costs continue.
The car expert sees another risk of price pressure: that the discount battle ultimately leads to worse cars. “If you look at the balance sheets of the auto delivery companies, you can see that your profits are about two percent. But when the car companies then demand discounts of ten percent from suppliers – how do you get that? This can only be done at the expense of product quality.”
In the meantime, the Chinese government is trying to intervene. Among other things, car companies should be obliged to better pay and pay within 60 days in the future. It is questionable whether this is enforced everywhere on the giant market. The practice of the brand new used cars should also end.
Companies rely on exports
Car manufacturers who are in financial difficulties are likely to put the new payment rules under pressure. Experts expect many of the 100 Chinese manufacturers to close in the long run. The companies that have set up long financial breath and their production are most effective. It is this pressure that Chinese carmakers also pass on to foreign competition at home and abroad.
China’s corporations put their hope on export. China now sells as many cars abroad as no other state. Europe is also an important market. In Germany, where the Chinese manufacturers have not yet really gained a foothold, electric small cars are now being launched for around 20,000 euros despite the EU-Zölle.
In China, such models currently cost around 7,000 euros. Because the pressure on the manufacturers to bring them to customers is great.
