After North and South Volkswagen jointly reduced prices, the market remained relatively calm. However, it was already raining over the towers — the large-scale price cuts in the auto industry are not far off. In recent days, price reductions have once again become the most talked-about topic in the sector. Rumors of new price cuts have been linked to Guangzhou Honda. On June 28, the "Jinghua Times" reported that some Beijing dealers were offering different discount rates for the Guangzhou Honda Accord. The next day, Guangzhou Honda officially denied the report, stating that any local price adjustments had nothing to do with the company and that no official price cuts were planned. Despite these denials, many believe that the era of high car prices is over. The auto market has been in a downturn for more than two years, and even the latest price cuts from manufacturers haven't been enough to attract significant customer interest. Reports indicate that after several automakers cut prices, their showrooms remained quiet and uneventful. Consumers feel that the discounts still fall short of their expectations. The case of FAW-Volkswagen and Shanghai Volkswagen serves as a prime example. Their joint price cuts were widely criticized as “loud thunder and little rain,” since many dealers had already offered similar discounts before the official announcement. In fact, this was the first time in two decades that both VW joint ventures in China announced coordinated price cuts — a major event for the companies. Yet, the market reaction was underwhelming. This suggests that the current price reductions are not yet deep enough to truly stimulate demand. Automakers claim they're not making much profit and that car margins are slim, but consumers remain skeptical. Years of experience have taught them that manufacturers often promise not to cut prices, only to follow up with heavy discounts soon after. There's still room for further price reductions, especially for mid-size and premium cars. Reports suggest that some manufacturers can still make tens of millions in profit per year by producing tens of thousands of vehicles. This indicates that the current pricing hasn’t reached its lowest point, and consumers still hold out hope for better deals. As small manufacturers struggle to keep up with the price wars, the automotive industry is likely to see a consolidation. Some smaller players may be forced out of the market, raising the bar for entry and accelerating industry concentration. Over the past two years, the market share of the top 10 Chinese automakers has not increased — instead, it has declined slightly, indicating more competition entering the sector. If major manufacturers continue cutting prices, they will rely on brand strength and scale to survive. Meanwhile, the product diversity of mainstream brands gives them an edge, putting pressure on smaller manufacturers, especially those that produce only one model. The recent price cuts by North and South Volkswagen didn’t spark much excitement. But the trend is clear: large-scale price reductions are coming. If this happens, it won’t just be about temptation — all major players will adjust their strategies based on cost and scale, leading to a more competitive market. Small manufacturers may not be able to withstand the pressure and could eventually exit the market. While this might seem harsh, it could ultimately benefit consumers and promote a healthier industry. It’s a real test of market competition. The government has long supported large automakers by setting high industry entry barriers. Once profits drop too low, some companies may lose interest in the market. Beyond price cuts, there are other ways to revive the sector, such as revitalizing personal car credit systems. One shocking figure was the 100 billion yuan in bad debt from personal car loans in China. This led to a sharp decline in consumer credit activity. Banks have since raised lending standards, and insurance companies have pulled back, causing a steep drop in credit-based car sales — now less than a quarter of last year’s level. However, as the market evolves, more consumers are expected to turn to financing options. To support this, some automakers are working with banks to provide credit solutions. For example, Beijing Hyundai partnered with CITIC Industrial Bank, while Shenzhen Development Bank collaborated with Volvo. BMW Brilliance also joined forces with China Merchants Bank to offer credit services. These moves represent a shift toward manufacturer-backed credit guarantees, which reduce risk for banks and help boost sales. The outlook isn’t entirely bleak. Although the market faces challenges, it's expected to rebound in the second half of the year due to various economic stimuli. Looking at the broader economic picture, the main drivers of growth are investment, consumption, and exports. While investment growth has slowed, and exports remain stable, stimulating consumption is becoming increasingly important for maintaining economic stability. With macroeconomic policies taking effect, the government is focusing on boosting domestic demand. This bodes well for the auto industry, as consumers may soon see better credit options and a more favorable purchasing environment. (Liyuan) Editor of this site Source: Southern Weekend

Steering Gear

Steering gear

Chongqing Zhongheng Chuangxin Auto Parts Co., Ltd , https://www.zhcx-autoparts.com