Profit margins in China’s automotive industry were squeezed even further in 2024, as cut-throat competition continued to claim weaker electric vehicle (EV) makers.

Industry-wide margins for car manufacturers in the world’s largest market averaged 4.4% in the January through November period, data released on Friday by China’s Passenger Car Association (PCA) show. They averaged 5% in 2023.

That was “still low compared with the average profit margin of 6.1% of downstream industrial enterprises”, the 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 characterised 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 (US$1.3 trillion or RM5.8 trillion), while costs climbed 4% to 8.3 trillion yuan, the PCA said on 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%.

  - Bloomberg