Bottom line: Beijing should mete out stiff punishment, including big fines and jail sentences, for companies that fraudulently obtained subsidies under the government’s program to promote new energy vehicle development.
Chery accused of fraud in new energy car scandal
What started as a wave of criticism against new energy car makers for producing mediocre products that nobody wanted is rapidly becoming a major scandal, with reports that many of those companies submitted fake information in order to get lucrative government subsidies. The scandal netted major car makers King Long and Chery last week, and reports have emerged that even industry leader BYD (HKEx: 1211; Shenzhen: 002594 )may be suspected of illegally obtaining government grants.
Such trickery is an extension of another trend that sees Chinese companies rush into unfamiliar sectors that Beijing has targeted for development, often resulting in a flood of mediocre or inferior products into the market. Such rushes not only create big market disruptions, but also result in huge sums of wasted investment and slow down development of emerging industries. Read Full Post…
Bottom line: SAIC’s foray with GM into Indonesia could stand a moderate chance of success, while BYD’s new auto financing joint venture is unlikely to provide a major boost for its stalling EV campaign.
BYD gets approved for auto finance JV
Two of China’s more innovative automakers are in the headlines today, making interesting moves as each looks to maintain growth as the domestic car market sputters. One move will see domestic leader SAIC (Shanghai: 600104) make a new attempt to move outside China with plans to open an Indonesian factory with US joint venture partner General Motors (NYSE: GM). The second move has the sputtering BYD (HKEx: 1211; Shenzhen: 002594) getting government approval to launch a vehicle finance joint venture, which could potentially help to jump-start its stalling electric vehicle (EV) program. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 30. To view a full article or story, click on the link next to the headline.
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China Retail Executive Wang Being Probed In Bribery Case (English article)
GAPPRFT Mulls Quota System for Foreign Online Video Content – Source (English article)
A couple of headlines are spotlighting the ongoing woes of 2 groups in China’s auto sector, with domestic brands and new energy vehicle makers both showing signs of difficulty. In the former category, reports that former domestic high-flyer Chery is closing one of its biggest Beijing dealerships spotlight the broader woes of domestic car brands that are losing share to better-run foreign rivals. In the latter category, another media report is showing that new energy vehicle sales were largely insignificant in the first 4 months of the year, even though they did notch major gains over 2013. Read Full Post…
I have to give my congratulations to new energy car maker Tesla (Nasdaq: TSLA) for creating the kind of buzz and excitement this week that only names like Apple (Nasdaq: AAPL) and smartphone sensation Xiaomi have typically been able to muster. In the last 2 days, the company and its charismatic founder Elon Musk were all over the Chinese headlines as Tesla delivered its first electric vehicles (EVs) in China on the sidelines of the nation’s biggest annual auto show happening this week in Beijing. Musk seems to have done interviews with nearly all of the major publications I regularly read, leading me to wonder if the man ever sleeps. Read Full Post…
US electric car maker Tesla (Nasdaq: TSLA) is setting some tough goals for itself during its first year in China, aiming to take advantage of government incentives and its high-end brand image to quickly take a big share of the market. I did a little math based on the company’s latest remarks, and its ambitious target for this year would represent around three-quarters of all electric vehicles sold in China in 2012. If it really can meet the new target, I suspect the company’s biggest strength will be its position as a luxury brand, since most people who buy EVs in China will probably do so more for the snob factor than due to any incentives from Beijing or desire to save the environment. Read Full Post…
A slew of year-end news about China’s auto industry is shining a spotlight on the tough times that domestic car makers are facing not only at home but also abroad as they grapple with tough competition and other market factors. Domestic nameplates like Geely (HKEx: 175), Chery and BYD (HKEx: 1211; Shenzhen: 002594) have steadily lost share in their home market over the last few years to big foreign names like GM (NYSE: GM) and Volkswagen (Frankfurt: VOWG), but posted strong export gains as they looked to overseas markets to partly offset the declines at home. But now even the export picture is looking bleak, with the latest word that no Chinese car makers will attend the industry-leading North American International Auto Show in Detroit this week. (English article) Read Full Post…
It’s quiet outside as markets reopen on this first work day after the New Year, so I thought I’d start off 2014 with some predictions for the year ahead in the sectors that I cover. Generally speaking, I do think the first half of the year will see a continuation of strong momentum that began in late 2013 for many sectors. But that momentum will slow as we near the mid-year mark, and 2014 could end with a whimper as the Chinese economy continues to slow and Beijing pushes for higher quality growth. Read Full Post…
China’s auto industry is in desperate need of consolidation, and faded car maker Chery looks set to become one of the first victims despite its launch of a turnaround plan that looks like too little too late. Of course there’s always the possibility that local government stakeholders will come to the rescue of this colorful company, which is a big employer and economic engine in its home province of Anhui. But central leaders in Beijing seem increasingly determined to force consolidation in many of the nation’s overcrowded industries, and cars are one area where such downsizing is long overdue if China ever wants to produce some world-class auto makers. Read Full Post…
A couple of news bits from the auto space are underscoring how competitive the sector has become, with domestic carmaker Dongfeng Motor signing a new tie-up with Swedish truck maker Volvo, as Germany’s Volkswagen (Frankfurt: VOWG) moves closer to entering the low-end market traditionally shunned by foreign names. Both of these cases show that big-name automakers, both domestic and foreign, will have to look for creative new ways to keep their business growing in the hyper-competitive Chinese market, and that the days where companies could simply construct a new multibillion-dollar factory to fuel additional growth may be in the past.
Less than 2 months after signing a major R&D tie-up with rival Chery, leading south China automaker Guangzhou Automobile (HKEx: 2238) is back in the headlines with news of a similar tie-up with 2 other smaller rivals. This latest move makes Guangzhou Auto look increasingly like a potential consolidator for the many smaller and mid-sized automakers in nearby provinces, potentially molding the company into a future General Motors (NYSE: GM) of China. Auto historians will note that GM has no formal brands carrying its own name, but rather was formed through the consolidation of many smaller brands during a similar consolidation of the US auto industry many decades ago.
A couple of news bits from the auto space are underscoring how competitive the sector has become, with domestic carmaker Dongfeng Motor signing a new tie-up with Swedish truck maker Volvo, as Germany’s Volkswagen (Frankfurt: VOWG) moves closer to entering the low-end market traditionally shunned by foreign names. Both of these cases show that big-name automakers, both domestic and foreign, will have to look for creative new ways to keep their business growing in the hyper-competitive Chinese market, and that the days where companies could simply construct a new multibillion-dollar factory to fuel additional growth may be in the past.
Less than 2 months after signing a major R&D tie-up with rival Chery, leading south China automaker Guangzhou Automobile (HKEx: 2238) is back in the headlines with news of a similar tie-up with 2 other smaller rivals. This latest move makes Guangzhou Auto look increasingly like a potential consolidator for the many smaller and mid-sized automakers in nearby provinces, potentially molding the company into a future General Motors (NYSE: GM) of China. Auto historians will note that GM has no formal brands carrying its own name, but rather was formed through the consolidation of many smaller brands during a similar consolidation of the US auto industry many decades ago.
