Chinese brands look overseas
The competitive car market in China contracted again last month as brands, led by BYD, pushed exports to sidestep a price war in the domestic market.
Sales in the world’s biggest automotive market nosedived by 24 per cent to 1.54 million units in August, reports the China Passenger Car Association (CPCA). Year-to-date deliveries are down more than one-fifth as a real-estate crisis affects big-ticket expenditure.
Carmakers there are looking to expand elsewhere. Their exports jumped by 78 per cent to 888,000 units last month, with overseas sales now accounting for 38 per cent of the total – up from about 20 per cent a year ago.
Chinese companies with sufficient scale and resources are gaining share in markets such as Europe, South America and down under as brands relying solely on domestic buyers face growing pressure.
BYD has now lifted its target for overseas sales to as much as two million units this year, up from 1.5 million. It was the biggest exporter of new-energy models from China in August, with more than 184,000 going overseas.
Meanwhile, aggressive discounting in China is inflicting financial damage across the sector. Industry profit margins fell to 3.6 per cent during the first seven months of the year, well behind the 6.5 per cent average returns across the country’s broader industrial sector.
The CPCA reports carmakers are caught between rising upstream expenses and a domestic retail environment that requires continuous discounting to maintain volume.
