Loss about $700 on selling a vehicle; Second-hand dealers can't sell a single car a month.

Summary

The automotive market in China faces a dire situation with plummeting car sales, intense competition, and an oversupply issue. Dealerships struggle with low consumer demand and financial pressures, leading to closures and bankruptcies. Despite government subsidies, the market remains sluggish, affecting both new and used car sectors. Luxury car brands like BMW, Mercedes-Benz, and Audi are caught in a price war, shifting focus to stabilize prices and improve sales quality.

Takeaways

• 🚗 The new car market in Ran is experiencing a severe price war, with dealerships selling the same car at vastly different prices, making it difficult to sell even at low prices.
• 📉 Car sales have been declining, with dealerships struggling to sell inventory that has been sitting for months, indicating a lack of demand for new cars.
• 💔 The overall market for automobiles is described as 'dire,' with even popular brands like Tesla and BYD seeing a significant drop in sales compared to peak periods.
• 🏦 The China Passenger Car Association reported that consumer spending is sluggish due to a slow economic recovery, despite government subsidies introduced to encourage car trade-ins.
• 📊 National passenger car market sales statistics show a continuous decline for three months, with a year-on-year decrease of 6.9% in June.
• 💼 The script highlights the dilemma of the car market, where both those who have bought cars and those who haven't are left with empty wallets, affecting the market's dynamics.
• 📉 SAIC Group, China's largest automaker, faces significant obstacles with a drop in annual sales from over 7 million vehicles in 2018 to just over 5 million in 2023, and financial pressure due to poor performance of high-end EVs and EU tariffs.
• 🛑 The collapse of large car dealerships like Sen One Group and the financial crisis of others have left many car owners in limbo, having paid for cars they have yet to receive.
• 📉 Both new and used car markets are struggling, with the transaction volume of the secondhand car market decreasing and many dealers facing losses.
• 📈 The average inventory cycle for used cars has increased, indicating longer times to sell vehicles and increased financial strain on dealers.
• 💡 The script suggests that the car market may only improve when car companies stop exaggerating promotions and electric cars become the true path forward, hinting at a potential shift in consumer preferences.

Q & A

Why can't new cars be sold in Ran?

The intense competition in the car market in Ran leads to a situation where new car dealerships are quickly saturated, resulting in a surplus of cars that are difficult to sell even at low prices.

What was the price of the car mentioned in the script that was bought in March?

The car bought in March was priced at 20,000 with a down payment of 3,900.

What is the current situation of the automobile market in July according to the script?

The market situation in July is dire, with a lack of demand for cars, increasing inventory, and decreasing prices that still fail to attract buyers.

How did the China Passenger Car Association describe the consumers' willingness to spend on cars?

The China Passenger Car Association reported that consumers' willingness to spend is sluggish due to China's slow economic recovery, despite government financial subsidies introduced to encourage car trade-ins.

What was the year-on-year decrease in national passenger car market sales in June as per the report?

The year-on-year decrease in national passenger car market sales in June was 6.9%.

What challenges are faced by car dealers in the current market?

Car dealers are facing challenges such as heavy losses, increased competition, bank credit threshold increases, and complex new loan processes, leading to significant operating pressures.

How has the performance of high-end EVs and the EU's additional tariffs on Chinese EVs affected SAIC Group?

The performance of high-end EVs and the EU's additional tariffs on Chinese EVs have led to a significant financial pressure on SAIC Group, contributing to a decline in sales and revenue.

What was the sales volume of SAIC Group in the first half of 2024 according to the survey by the China Automobile Dealers Association?

According to the survey, in the first half of 2024, only 18.4% of dealers completed half of their sales tasks, indicating a significant drop in sales volume.

What is the current state of the secondhand car market in China?

The secondhand car market in China is struggling with a decrease in transaction volumes, extended inventory turnover periods, and a high percentage of dealers suffering losses.

How have foreign automakers responded to the challenges in the Chinese market?

Foreign automakers have responded by tightening spending, ceasing production at some plants, selling factories to local companies, and in some cases, completely withdrawing from the Chinese market.

What strategy have luxury car brands like Mercedes-Benz, BMW, and Audi adopted to cope with the market situation?

Luxury car brands like Mercedes-Benz, BMW, and Audi have adopted a strategy of reducing volume and stabilizing prices to provide dealers with a more relaxed environment and to improve the quality of sales and after-sales services.