China Auto Roundup: Used-Car Dealers’ Bumpy Ride, EU Tariffs Kick In

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China-made new-energy vehicles are loaded for export to Europe, Xiamen Far Sea Container Terminal. Photo: VCG

Welcome to the Auto Roundup — a weekly briefing on the biggest headlines in China’s automotive industry covering electric vehicles, gas-powered cars, battery and autonomous technology, and more.

China’s used-car dealers face a bumpy ride as price wars intensify

China’s second-hand car market is growing rapidly as more motorists take to the road. Industry players have little to celebrate, however, as the fledgling sector is still like the Wild West while profit margins are shrinking.

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China's used-car market is expanding, with 16.26 million vehicles changing hands in the first half of 2024, but dealers face shrinking profit margins and significant financial losses.
Chinese EV registrations in Europe dropped from 10.2% to 9.9% in July 2023 due to new tariffs up to 48%, amplifying a broader EV sales decline after Germany removed incentives.
BYD's strong performance contrasts with financial struggles at Li Auto and XPeng, highlighting a competitive squeeze among Chinese EV manufacturers.

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Who’s Who

Haishangche (Nanjing) Technology Co. Ltd.: Haishangche (Nanjing) Technology Co. Ltd. specializes in used-car exports. According to the article, its chief executive, Li Huai, reported that over 90% of used-car dealers suffered losses in the first half of the year.

SAIC Motor Corp. Ltd.: SAIC Motor Corp. Ltd. is a Chinese automaker that faced a decline in electric vehicle (EV) registrations in Europe in July. Along with other Chinese brands like BYD, SAIC's market share dropped to 9.9% from 10.2% compared to July 2023. This decline was exacerbated by new tariffs on Chinese-made EVs, which increased duties up to 48%, and by the removal of EV incentives in Germany, Europe’s largest auto market.

BYD Co. Ltd.: BYD Co. Ltd. has posted a 33% jump in second-quarter profit, demonstrating strong growth. It is also buying out its German distributor, Hedin Electric Mobility, to strengthen its presence in Europe. Despite the new tariffs affecting EV sales, BYD maintains a strong market position, squeezing out smaller competitors like Li Auto and XPeng.

Li Auto Inc.: Li Auto Inc. is facing challenges in China's competitive EV market, posting a larger-than-expected 52% drop in second-quarter earnings. This has negatively impacted its U.S.-listed shares and reflects the broader challenges smaller EV-makers face against dominant players like BYD. Despite these difficulties, Li Auto has not yet broken into the top 10 largest Chinese EV-makers by sales.

XPeng Inc.: XPeng Inc., a smaller Chinese EV maker, reported disappointing earnings, with a third-quarter revenue forecast well below analyst expectations. This comes amid a fierce price war in China, and despite its efforts, XPeng has not managed to break into the top 10 largest Chinese EV-makers by sales.

Hedin Electric Mobility: Hedin Electric Mobility is a German car distributor that BYD Co. Ltd. has agreed to buy as part of Chinese EV-makers' efforts to expand in Europe. The transaction includes a takeover of BYD’s flagship stores in Stuttgart and Frankfurt and is expected to close in the fourth quarter of the year. Financial details were not disclosed, and the deal is subject to regulatory approval.

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What Happened When

July 2024：: Chinese automakers registered fewer electric cars across Europe.

July 5, 2024：: New tariffs on Chinese-made EVs were introduced, raising duties on Chinese-made EVs to as high as 48%.

Thursday, August 29, 2024：: Taiping Reinsurance (China) Co. Ltd. and the China Asia Pacific Reinsurance Research Center published a white paper discussing the critical gap in China’s automotive insurance market.