There’s nothing new here. And we must say that the entire industry is in crisis, not just Volkswagen. In China, which is often praised as the new carmaker country, only three supplier are profitable (BYD, Xiamoi, Leapmotor), and all three are facing deep crises as their profits shrink sharply. The other 125 or so are deep in the red, and analyst say they’ll won’t survive this decade.
This is despite Chinese brands benefiting from tremendous subsidy regulations that have never been available for their global competitors, a cheap workforce through forced labour regimes, which allows them to produce massive overcapacity that Chinese brands then need to sell globally due to a shrinking domestic Chinese market. And not to forget overly long payment terms as suppliers in Chinese value chains often wait up to 10 months for getting paid (the average for European value chains is 5 to 8 weeks).
China’s overcapacity is a decisive reason for the entire sector’s crisis imo.
Is this the same crisis as last week?
There’s nothing new here. And we must say that the entire industry is in crisis, not just Volkswagen. In China, which is often praised as the new carmaker country, only three supplier are profitable (BYD, Xiamoi, Leapmotor), and all three are facing deep crises as their profits shrink sharply. The other 125 or so are deep in the red, and analyst say they’ll won’t survive this decade.
This is despite Chinese brands benefiting from tremendous subsidy regulations that have never been available for their global competitors, a cheap workforce through forced labour regimes, which allows them to produce massive overcapacity that Chinese brands then need to sell globally due to a shrinking domestic Chinese market. And not to forget overly long payment terms as suppliers in Chinese value chains often wait up to 10 months for getting paid (the average for European value chains is 5 to 8 weeks).
China’s overcapacity is a decisive reason for the entire sector’s crisis imo.