China's Auto Industry Faces Increased Pressure as Prices Drop and Subsidies Lapse

The automotive industry in China is bracing for a tougher market ahead, with decreased subsidies and increased competition sparking worry among executives.

Deng Chenghao, CEO of Deep Blue Automobile, explained that while there will be some spending reductions due to the policy, he expects prices to continue dropping. "As prices go down, companies can only sustain 15% profit margins before risking their lives," said Dong. The loss of sales could have serious implications for struggling automakers.

Deng noted that this year's subsidies had a significant impact on consumers, leading to increased spending and causing uncertainty about future policies affecting market trends.

Another concern is how the policy may affect the performance of companies like those just starting out in large-scale expansion efforts or having high pricing power. In such cases, an increase in competition could cause significant struggles for these brands to remain relevant.

The question of new energy types is on everyone's mind: Will fuel cars eventually lose their popularity as people opt in for hybrid and electric vehicles instead? Many already see their presence growing beyond 50%.

As they expand further into traditional markets with better price points, smaller hybrid electricity vehicles are attracting considerable attention. Specifically, they could represent a challenge for the existing internal combustion engine industry, potentially shifting consumer behavior towards eco-friendly car purchases.

This shift makes these small-scale electric motor cars potential catalysts in accelerating the growth of alternative energy on the roads.