Date
18 October 2017
After Geely priced its new SUV model aggressively at its March debut, a rival carmaker retaliated with discounts on two of its models. Photo: internet.
After Geely priced its new SUV model aggressively at its March debut, a rival carmaker retaliated with discounts on two of its models. Photo: internet.

Why Chinese carmakers face tighter margins

Although car sales in mainland China registered modest growth last month, domestic carmakers have to brace for more competition in the most profitable segment — sport utility vehicles.

SUV sales climbed 31 percent year on year in April.

But, on the chart of the best-selling models, rankings of individual models keep changing, and very few manage to stay at the top for long.

This is because nearly all the major brands are aggressively launching new SUVs.

Chongqing Changan Automobile Co. Ltd. (200625.CN) and Guangzhou Automobile Group Ltd. (02238.HK), for instance, introduced new models at the recent Beijing auto show.

Soon after a new SUV from Geely Automobile Holdings Ltd. (00175.HK) hit the market in March, another major SUV maker, Great Wall Motor Co. Ltd. (02333.HK), reportedly slashed the prices of its offerings.

Despite the continued expansion of China’s car market, rivalry in the sector is going to get worse, and a looming price war is set to trim the margins of carmakers and dealers this year.

– Contact us at english@hkej.com

FL

EJ Insight writer

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