BMW signalled a potential for losses after slashing its profit margin to between -0.5% and 0.5% this year and blamed fourth-quarter costs tied to the restructuring that includes 8,000 job cuts in its home market.
BMW signalled a potential for losses after slashing its profit margin to between -0.5% and 0.5% this year and blamed fourth-quarter costs tied to the restructuring that includes 8,000 job cuts in its home market.
The subsidies are paid in China. This is what it means when I said that the Chinese taxpayers pay the bill (and the ones who work under a 996 working culture and even forced labour schemes with a social protection in China much weaker than in Europe). Without public money and state protection, Chinese carmakers wouldn’t be alive (and their managers wouldn’t earn millions).
Chinese carmakers also benefit from their own supply chains. While European carmakers pay their suppliers within a few weeks, Chinese car manufacturers - particularly BYD - take up to 10 months to pay their bills. There has been another ‘initiative’ last year by the Chinese government urging companies to pay earlier, but so far nothing has changed beyond lip services.
All analysts, including Chinese firms and its own government, agree that China’s car industry is deep in trouble and is producing overcapacity that they can’t sell.
And as you mentioned the cost of living in Europe: Chinese carmakers’ losses are covered by Chinese public money while social welfare is practically non-existent as this, in the words of China’s Xi Jinping, would ‘make people lazy.’
Government subsidies are paid for by the taxpayers, yes, but what companies are doing with subsidies matters. It’s common practice in the US for companies to take subsidies and then continue with high prices (i.e. pocketing the government subsidies, as I was saying), unlike the price wars we’re seeing in China. So at least they’re seeing lower prices in China thanks to subsidies whereas I can’t say the same over here.
Interesting that Chinese car manufacturers pay their suppliers much later, I didn’t know about that. I’m sure that makes a difference in the quarterly budgeting for suppliers, but if manufacturers like BYD make good on their payments eventually then suppliers know what they’re getting into.
China’s car industry being in trouble is up to the definition of “trouble” I’d say. Too much competition can be a kind of trouble, but currently that means really low prices. Eventually it’ll mean a bunch of failing companies and consolidation, but that’s how a market is supposed to work. Meanwhile in the west we’re already at the consolidated stage with only a small number of auto companies that are so comfortable that they feel they can charge top dollar for bottom-of-the-barrel quality (particularly in the US), still getting subsidies and tariffs in their favor and are considered too-big-to-fail so they can safely assume they will be bailed out every time.
Your comments make really no sense, and many claims are outright false as I have said already. But you’re repeating the same false “China good, the West bad” narrative over and again.
You’re just repeating the subsidies and overcapacity narrative over and over again that the west pushes to protect profit margins of their auto companies that fail to compete. The whole point of subsidies is to grow an industry and overcapacity is a function of the market that corrects itself when the companies that can’t compete drop out.
Companies in the west dragged their feet to create EVs and still do so to this day. Tesla was the sole western company for the longest time putting in a serious effort and they got billions in subsidies. Most other companies just wanted to target the “luxury” market if they made any EVs at all.
Things were apparently fine when the west was making billions in China’s market, apparently not a problem of overcapacity in that case, but now that Chinese companies are competitive, it’s endless crying that lower prices for customers is a bad thing.