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.
They are blaming the job cuts that they themselves decided on? Thats a new strategy. Although I guess they didn’t cut for the usual bullshit but because they are an ageing industry not making as much money anymore as they used to.
They offered settlements to almost everyone, mostly because they wanted to get out of super expensive additional pension plans that all BMW employees have.
Sales in China fell 22% in the first nine months of the year, which BMW said was in line with a broader downturn in that market.
That’s basically why also Chinese companies - in the car industry and beyond - are desperately turning to Europe as their domestic market has been facing low consumer confidence and consumption.
I’m not so sure about that: https://www.ceicdata.com/en/china/automobile-sales-annual/automobile-sales
I think it’s more like Chinese companies are producing so many vehicles and there is so much competition in the market that companies need to find a bigger pie to make more sales. From what it looks like, BMW is just getting crowded out of the market in favor of vehicles made by Chinese companies.
There has been a fierce price war in China’s domestic market for years. Even the Chinese Communist Party has officially warned about that calling on the companies to end this practice. Some time ago, Elon Musk’s Tesla - which runs a factory in Shanghai as we know - signed a “pledge” with its Chinese rivals committing to China’s “core socialist values” and ending the price war in the country. It had no effect, though, as the price wars have been continuing.
Chinese carmakers export these price wars to other regions, including Europe. Only three Chinese EV manufacturers are profitable, while some 130 are in the red, benefiting from Chinese subsidies (or Chinese taxpayer’s money if you want to put it that way).
This is not limited to the EV or car market but is seen in all industries. With weak domestic markets China seeks to sell its overcapacity to foreign markets as it increasingly depends on exports.
Sounds like the market working as intended. I wish we could get some price wars here to reduce our cost of living. Imagine that, companies competing to gain sales rather than a handful of companies with full control of the market jacking prices up together and telling customers “take it or leave it” while pocketing government subsidies.
Based on the chart I previously posted, it looks like 2025 was a record year in sales. I’ve looked up another source: https://tradingeconomics.com/china/total-vehicle-sales and it looks like 2026 is set to have lower sales than 2025, but I wouldn’t necessarily call it weak. The numbers are in-between 2024 and 2025, and 2024 was no slouch.
… companies competing to gain sales rather than a handful of companies with full control of the market jacking prices up together and telling customers “take it or leave it” while pocketing government subsidies.
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.
If you flip this around to “China bad, the West good” it describes 99% of your posts and comments tardigrade…
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.
