In China, fears are developing from a financial crisis in the middle of the price war

During a second -hand car market in Beijing, the seller MA Hui said that he feared that the China's electric vehicle industry was in a race at the bottom.

The manufacturers of electric vehicles, led by the market leader of the country byd, were engaged in a deadly price war, depressing profits for brands, as well as sellers such as MA.

“We are all losing money last year,” said my colleagues selling second -hand car on the market. “There are too many companies that make too many new energy cars.”

Chinese business partners have often accused the country of having flooded the world cheap Chinese electric vehicle market. Nowadays, similar accusations fly in China, which raises concerns about financial stress in industry.

The Official Journal of the Communist Party, People's Daily, for example, published a comment on Monday, entitled “The” Prix War “in the automotive industry does not lead anywhere and has no future”.

“Disorderly 'Price Wars” reduces profits through the chain, which has an impact on the whole ecosystem and risking the drop in income for workers “, warned the newspaper.” In the long term, this competition “Race to the Bottom” is not durable. “

Byd draws the most fire after announcing price reductions at the end of May for many of its models. Some reductions are as high as 34%. Its cheapest car, the Mini-Hayon Seagull, costs only about $ 7,700, compared to around $ 10,000.

The intense price war has led high -level automobile executives to ring the alarm – with the head of Great Wall Motor calling “unhealthy” industry.

In an interview with the Chinese media Sina Finance on May 23, Great Wall Motor, Wei Jianjun, made parallels with the dying goods sector of China and his child from the poster now disappeared, the developer Evergrande.

“A crisis” resembling an “Evergrande” already exists in the automotive industry, “he said.” It has not yet exploded. “

A group of the government supported by the government also called on companies not to “pour” vehicles below the cost of production. In a press release, the China Association of Automobile Manufacturers made a veiled blow in Byd.

“A certain car manufacturer has taken the lead by launching significant price reductions and many companies have followed suit, triggering a new series of panic of” Prix war “, said the group.

Byd rejected Wei's comment as alarmist and said he believed in fair competition in response to Camics from Caam.

In an additional strain sign, the sellers of the second -hand car market in Beijing informed CNBC of a phenomenon called “zero kilometering cars”, which is intended to help car manufacturers and dealers to inflate sales volumes. This happens when the cars are recorded and plated and then marked as sold, but have never been motivated.

I said that he was worried about the job of the fierce competition. He told CNBC that he saw the impact of intense competition on consumers who are already shy to spending in the economy.

“With the price down like that, many buyers can wait,” he said.