Latest news with #priceWar
Bloomberg
17-07-2025
- Automotive
- Bloomberg
China's Underused Car Factories Are Flooding the World With Exports
The surge in Chinese car exports is reshaping automobile markets around the world, flooding countries with affordable vehicles and triggering a price war that's rippling through showrooms from Mexico to Malaysia. President Xi Jinping's government is showing signs it wants to move away from the cutthroat competition that's dragged on profits. Even the People's Daily, an outlet controlled by the Communist Party, said earlier this month it sees no winner from the rivalry. But for China's automotive industry, confronting a structural crisis rooted in overcapacity, the momentum may be irreversible. Chinese-made cars are taking over the streets in parts of South America while cheap but super high-quality electric vehicles from automakers like BYD Co. are winning over thousands of consumers in Europe. 'Chinese automakers are eyeing higher profit margins overseas,' Ron Zheng, a partner at global consultancy Roland Berger GmbH, said. 'Regional markets will take a hit but the price competition isn't likely to be as intense as in China.' To understand the global impact, one needs to first start in China, the world's biggest automobile market. There, only about 15% of some 70 active automakers tracked by Gasgoo Automotive Research Institute last year had a factory utilization rate of 70% or more, a benchmark widely considered as the minimum viable for profitability and sustainability in a mature market. Many automakers fell far short of the benchmark utilization rate in 2024 BYD, the world's largest new-energy vehicle producer, has maintained stable production levels, consistently pumping out cars and running its factories at utilization rates of between 80% to 85% from 2022 to 2024. Several key foreign manufacturing joint ventures, however, have witnessed significant declines in production rates, notably the SAIC-GM alliance, a grouping between state owned SAIC Motor Corp. and US automaker General Motors Co., and GAC-Honda, a tie up between Guangzhou Automobile Group Co. and Japan's Honda Motor Co. Read more: GM Is Pulling Back in Chinese Car Market It Once Pioneered Tesla Inc., which makes the Model 3 electric sedan and Model Y sport utility vehicle at its Shanghai plant for domestic consumption and export to other parts of Asia and Europe, ranked No. 1 in terms of capacity utilization, at 96%. Rising star Xiaomi Corp. was second, with the overwhelming popularity of its initial offering, coupled with order hikes for its recently debuted YU7 SUV, requiring a swift ramp up in production. Xiaomi doesn't sell its EVs abroad, yet. But amid a cooling domestic economy and intensifying competition, many other Chinese exporters are aggressively pivoting to exports, sending their cars to all corners of the globe, except the US, where tariffs make it unpalatable. China is now the world's biggest automobile exporter, surpassing Japan and Germany. 'Established automakers are voicing concerns about the impact of Chinese exports on their revenue streams,' Chris Liu, Shanghai-based senior analyst at Omdia, said. 'The pressure to protect local jobs, profit structures and budgets will only grow.' Many Chinese Cars Go to Middle East, Latin America The value of total exports nearly tripled to $37.3 billion in 2025 from 2022 The extent of this export surge is vividly illustrated by recent trade figures. During the first five months of 2025, Chinese car exports reached new peaks, with shipments to the United Arab Emirates alone totalling $2.7 billion, a 551% increase from 2022 and underscoring the Middle East's burgeoning demand for Chinese vehicles. Beyond the Gulf, a diverse array of nations is fuelling China's export boom. Mexico, a key player in the North American automotive landscape, imported $2.4 billion worth of cars while Russia, despite geopolitical complexities, remained a significant market, taking in $2.2 billion. Chinese automakers are now projected to capture 30% of global car sales by 2030, up from 21% in 2024, with the most substantial gains expected in emerging markets such as Southeast Asia, the Middle East and Africa, and South America, according to consultancy AlixPartners. But foreign markets aren't always a safe fallback. Geopolitical winds and upfront costs for setting up overseas sales may prevent weaker players from exporting, meaning 'only the stronger companies are able to,' AlixPartners' Shanghai-based Managing Director Stephen Dyer said, noting that the average capacity utilization rate for the top five Chinese exporters in 2024 was 57%, better than the overall industry. At home, the price war shows little sign of easing. BYD Is Leading the Price War Change in car prices among China's top 15 brands since 2023 Despite cementing its position as the world's highest-volume maker of pure battery cars and plug-in hybrids and selling around 4.3 million vehicles last year, BYD is spearheading multiple rounds of price cuts in a discounting war that started in China in early 2023. That's intensifying the battle for market share and making survival increasingly precarious for those smaller players that lack scale. Read more: China Vows to Address 'Irrational Competition' in EV Sector Shenzhen-based BYD has slashed prices on average by 32%, data compiled by the China Automotive Technology and Research Center show. Its ability to cut deep without unduly impacting its own finances stems from its extensive vertical integration — BYD makes its own batteries and chips and is therefore shielded from many supply chain snarls—and poses a formidable advantage, Bernstein analysts led by Eunice Lee said. Competitors attempting to replicate it will 'face a long and costly journey.' 'While technically capable of delivering higher short-term margins, management has opted for a more disciplined approach, balancing near-term profit with expansion,' Lee said. More broadly, analysts at HSBC Holdings Plc don't see any let up in the price war, particularly over the warmer months. 'As summer usually sees low seasonality, we expect the pricing environment is likely to remain under pressure, given lukewarm overall demand and consumption trading down,' they wrote in a June 19 note. 'The industry is currently deep in the process of consolidation and has yet to reach the inflection point.' In a notable divergence from the prevailing downward trend, some brands are holding sticker prices steady. Tesla models have even recorded a modest 3.8% price increase over the past two years. Meanwhile, the consolidation crunch may only just be beginning. Back in 2009, BYD stood tall as almost the only EV player of scale but by 2025, hundreds of players crowded the market. Intense Price War Pushes Carmakers to Consolidate As smaller players fold and competition intensifies, bigger brands are taking market share — but the consolidation has yet to peak Many startups have faltered within the last few years and the phase out of government subsidies in 2018 further tempered the influx of new entrants. However, despite these headwinds, fresh players continue to emerge, signalling that the market's anticipated consolidation is far from complete. As of May, BYD remained the undisputed leader, commanding around 27% of China's retail EV sector, but there are still about 120 other brands vying for 37% of the market. And the ultimate shakeout may take longer in China. For one, there's the involvement of local governments, which often prolong the operations of some carmakers, even though they may be running at very low production rates, because those companies were directly or indirectly backed by authorities. 'The consolidation has not yet truly begun,' said Dyer, noting that local automakers' impact on employment and car parts supply networks are both vital channels for economic growth. 'In the end, it will slowly consolidate because car making is a truly cash-burning business. We expect to see maybe a dozen survivors.' With assistance from Chunying Zhang, Jin Wu and Yasufumi Saito Edited by Katrina Nicholas and Yue Qiu More On Bloomberg
RNZ News
09-07-2025
- Business
- RNZ News
Mango prices fall amid glut of imported fruit
Kesar mangoes at Westgate Pak'nSave supermarket. Photo: RNZ / Blessen Tom Indian mangoes are cheaper this season than they have been in recent years due to a fierce price war that has reportedly broken out among several retailers. The price-cutting reports have soured what has a been a successful season so far, with mangoes from India on display at some stores under the umbrella of major chains such as Woolworths, Farro Fresh and Foodstuffs, which owns New World and Pak'nSave supermarkets. Prasad Salaskar of Salient Enterprises, which imports and distributes Indian mangoes to retailers nationwide, had mixed feelings about the season to date. "It is definitely heartening to see Indian mangoes being sold at major supermarkets this year," Salaskar said. "You can say we have achieved our goal of mainstreaming Indian mangoes in New Zealand. "[But] we also saw a lot of price undercutting by Indian retailers this year. There were too many importers in markets, especially for the Kesar variety, which flooded the market. "Ultimately some [retailers] resorted to selling the fruit below cost," he said. "This kind of price war doesn't help anyone. We have devalued our prime fruit ourselves." Nirmal Pandey, who imports Indian mangoes under his Auckland-based brand Mango Bite, agreed. "Our imports increased almost threefold this year," Pandey said. "I was also happy to see the mainstreaming of Indian mangoes," he said. "While some retailers did try to initiate price wars, I believe customers have become savvy too. They know and understand quality," he said. "So even though we didn't reduce our prices to match their [prices], we still had a good season." Salaskar said the price-cutting was particular to Auckland. "I don't know how to prevent price undercutting in Auckland, where there is major competition among Indian retailers," he said. "But, for us, we aim to spread our distribution network across the country, collaborating with main-stream supermarkets." Kesar mangoes at Westgate Pak'nSave supermarket. Photo: RNZ / Blessen Tom Mango season in India usually starts in April and ends around mid-July once monsoon rain begins. The retail price in New Zealand varies between $50 and $85 per carton (eight to 12 mangoes weighing three or four kilograms), with variety and timing affecting the cost. Mangoes imported in April and July (at the start and end of the season) tend to be a little more expensive. While Kesar remains the most popular variety of mango , others such as Langra, Dasheri, Chausa, Neelam, Malda, Banganpalli, Totapuri, Rajapuri, Sinduri and premium variety Alphonso have been increasing their market share every year. While specific trade figures are not available for imported mangoes - the Ministry of Primary Industries categorises the fruit, dried or fresh, with guava and mangosteen - Hitesh Sharma, owner of Christchurch's Maia Foods, said his sales had increased by 20 percent this season. "Moreover, the varieties we sold almost doubled," Sharma said. Mangoes imported into New Zealand from India must meet requirements in the Import Health Standard and, as such, must go through fumigation at one of two approved facilities : the Maharashtra Agricultural Marketing Board vapour heat treatment facility in Mumbai and the Andhra Pradesh Agro Food facility in Tirupati near Chennai. Salaskar was impressed with a noticeable improvement in logistics when handling the fruit this year. "As a perishable product, logistics plays a very important role in importing mangoes here," he said. "We were able to reduce our wastage by half this year, which is always good." Pandey said the future of mango imports looked good. "We did some trial runs for a major retailer this year, and, hopefully, they will come on board too," he said. "A couple more vapour treatment facilities may also be approved in future, which will further aid imports," he said. "So, overall, things are looking bright for Indian mangoes in New Zealand year by year."
South China Morning Post
06-07-2025
- Business
- South China Morning Post
Meituan gets record orders as China's e-commerce war fuels demand for delivery service
Meituan said daily transaction volume on its dominant on-demand delivery reached an all-time high since its inception in 2010, briefly crashing its platform as online purchases surged amid a fresh round of price war among China's e-commerce leaders. Daily orders of food and retail goods for its instant delivery service surpassed 120 million on Saturday, according to the company, with food orders accounting for 100 million or 83 per cent of them. Meituan's delivery services suffered a technical breakdown in certain areas during the day as 'the number of user orders exceeded the historical peak', triggering temporary protective measures from its servers, Meituan said in a statement on Saturday. The problem was resolved within hours, it added. The surge in volume came as China's major e-commerce players – Alibaba Group Holding, and Meituan – stepped up their bets on instant delivery services in mainland China to compete for consumers. The rivalry is set to spur anaemic spending, which has dwindled amid concerns about China's economic outlook. Meituan and delivery workers are seen waiting at a traffic junction in Shanghai. Photo: Shutterstock Alibaba, which owns the South China Morning Post, pushed into the sector through its service known as Taobao Instant Commerce. It earlier this week announced a 50 billion yuan (US$7 billion) one-year subsidy programme. Meituan on Saturday offered discounts that cut the price of a cup of coffee to as low as 2 yuan, media reports showed.
Yahoo
01-07-2025
- Automotive
- Yahoo
Car dealers in China's Yangtze delta region warn of 'severe challenges'
BEIJING (Reuters) -Car dealers in one of China's richest regions are appealing to automakers to overhaul sales strategies amid mounting pressure on their cash flow and high inventories in another sign of the growing toll of the price war in the world's largest car market. Four dealer associations based in the Yangtze River Delta encompassing Shanghai city and the provinces of Jiangsu, Zhejiang and Anhui, issued a joint letter on their WeChat accounts on Monday, going public with the pressures they face. Most automakers sell their vehicles in China via dealerships, and the Delta region accounted for 23% of domestic car sales in 2024. "Car dealers in the Yangtze River Delta region face severe challenges such as high inventory, disorderly market competition and increased risk of capital chain rupture," said the letter that was addressed to "all automakers". "Some automakers have forced dealers to sell new cars at prices below cost," they added without naming any firms, saying such a strategy could violate China's competition laws. Dealer associations in the provinces of Henan and Jiangsu issued similar letters last week, while suppliers and dealers have both asked carmakers to pay them more promptly. The complaints indicate that Chinese automakers are continuing a years-long price war despite orders from regulators to stop as the strategy eats into the industry's profitability and financial health. The four dealer associations also said that inventories were above healthy levels. A gradual suspension in car loans in the region since June has compounded the problem leaving consumers who thought they had financing unable to pick up their cars, they added. The dealers made a number of suggestions, including that carmakers should allow them to suggest a reasonable inventory limit and adjust sales targets to better recognise the capacity of the regional market. China's legislature passed amendments to the anti-unfair competition law last week. The revised law strengthens rules against forced below-cost pricing and will come into effect in October. Sign in to access your portfolio
Reuters
01-07-2025
- Automotive
- Reuters
Car dealers in China's Yangtze delta region warn of 'severe challenges'
BEIJING, July 1 (Reuters) - Car dealers in one of China's richest regions are appealing to automakers to overhaul sales strategies amid mounting pressure on their cash flow and high inventories in another sign of the growing toll of the price war in the world's largest car market. Four dealer associations based in the Yangtze River Delta encompassing Shanghai city and the provinces of Jiangsu, Zhejiang and Anhui, issued a joint letter on their WeChat accounts on Monday, going public with the pressures they face. Most automakers sell their vehicles in China via dealerships, and the Delta region accounted for 23% of domestic car sales in 2024. "Car dealers in the Yangtze River Delta region face severe challenges such as high inventory, disorderly market competition and increased risk of capital chain rupture," said the letter that was addressed to "all automakers". "Some automakers have forced dealers to sell new cars at prices below cost," they added without naming any firms, saying such a strategy could violate China's competition laws. Dealer associations in the provinces of Henan and Jiangsu issued similar letters last week, while suppliers and dealers have both asked carmakers to pay them more promptly. The complaints indicate that Chinese automakers are continuing a years-long price war despite orders from regulators to stop as the strategy eats into the industry's profitability and financial health. The four dealer associations also said that inventories were above healthy levels. A gradual suspension in car loans in the region since June has compounded the problem leaving consumers who thought they had financing unable to pick up their cars, they added. The dealers made a number of suggestions, including that carmakers should allow them to suggest a reasonable inventory limit and adjust sales targets to better recognise the capacity of the regional market. China's legislature passed amendments to the anti-unfair competition law last week. The revised law strengthens rules against forced below-cost pricing and will come into effect in October.
