(Bloomberg) -- Profit margins in China’s automotive industry were squeezed even further in 2024 as cut-throat competition continued to claim weaker electric vehicle makers.
Industry-wide margins for car manufacturers in the world’s largest market averaged 4.4% in the January through November period, data released Friday by China’s Passenger Car Association show. They averaged 5% in 2023.
That was “still low compared with the average profit margin of 6.1% of downstream industrial enterprises,” PCA said. “The automotive industry needs to effectively reduce costs and increase efficiency, and increase the level of cost control,” Cui Dongshu, the industry body’s secretary general, said.
For at least the last two years, China’s car market, and particularly its EV sector, has been characterized by intense rivalry that’s spawned price cuts and deep discounting in an attempt to lure buyers. As BYD Co. has consolidated its grip, smaller players have gone out of business.
Jiyue, backed by Baidu Inc. and Geely Automobile Holdings Ltd., and Human Horizons Group Inc., known as HiPhi, were among this year’s casualties.
Total industry revenue for the first 11 months of the year rose just 3% to 9.5 trillion yuan ($1.3 trillion) while costs climbed 4% to 8.3 trillion yuan, PCA said Friday. Profits slipped to 413.2 billion yuan, a year-on-year decrease of 7.3%.
For the month of November, profits fell 35% and the margin of the automotive industry was even lower at 3.3%.
--With assistance from Qianwei Zhang.
(Adds November data in final paragraph. An earlier version corrected spelling of name in third paragraph.)
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