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We have to truly understand the Chinese auto market to see what is going on in the industry. Not only is this the largest market in the world but many of the Chinese companies are basically operating only this market.
In this video I discuss how bad things are and some of the nonsense we are hearing. This is simply a depressed market in a national recession. From this perspective, it is nothing new with large ticket items.
▶️ 3Speak
I agree that big ticket items selling less in a down market is expected. With regards to Chinese companies only operating in China. I recently saw an infographic of the different countries' populations, and India and China are at the top with 1.4 billion, while the US is at third with 340 million. With more than 4x the population of the third country, I think they will be ok. They just need to work on their economic problems, and they should bounce back.
Summary:
In this video, Task discusses the current situation in the Chinese auto market, emphasizing the impact of the Evergrande bankruptcy on the industry. He mentions the challenges faced by automotive companies in China, such as dropping prices and crashing sales. Task also highlights the closure of car dealerships and manufacturers, indicating a challenging period for the sector. Additionally, Task compares the Chinese auto market's condition to the U.S. market and addresses misconceptions surrounding Tesla's performance in China, pointing out that Tesla's sales decline was actually less severe compared to the industry average.
Detailed Article:
Task delves into the turmoil facing the Chinese auto market following the Evergrande bankruptcy. He notes that this event has reverberated through the economy, leading to concerns about additional bankruptcies in the real estate sector. The repercussions are pronounced in the automotive industry, with companies resorting to drastic measures like price reductions to combat plummeting sales. Task highlights the closure of numerous car dealerships and manufacturers in 2023, painting a bleak picture of the market's current state.
The CEO of Xpeng's characterization of the situation as a "bloodbath" underscores the severity of the challenges faced by automotive companies in China. Task predicts further closures of manufacturers and dealerships in the coming year due to the economic downturn. While he acknowledges the resilience of the market and expects a rebound at some point, the prevailing conditions indicate a turbulent period ahead for the automotive industry in China.
Drawing a comparison to the U.S. auto market, Task contrasts the relatively stable situation in the U.S. with the turmoil in China. He explains that while the U.S. market has faced challenges, it has not experienced the same level of disruption as seen in China, showcasing the contrast between the two largest automotive markets in the world.
Task also addresses the misconceptions surrounding Tesla's performance in China. He refutes claims of waning demand for Tesla vehicles in the country, citing a 14% sales decline, which, although significant, was lower than the 28% industry-wide decrease. Task also dispels notions of BYD surpassing Tesla in EV sales, pointing out that BYD's market limitations may hinder its growth potential in the current Chinese market conditions.
Finally, Task expresses optimism about the survival and emergence of certain key players in the industry, such as BYD and Xpeng. He anticipates a challenging road ahead for these companies but believes they have the resilience to weather the storm and emerge stronger in the global market. Despite the current difficulties, Task's analysis suggests that strategic decisions and a global outlook will be crucial for Chinese automotive companies to navigate the turbulent economic landscape.
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