China’s car makers saw profit margins dip to 4.4%, the lowest on record, as costs rise and competition intensifies. Read more now.
According to data released by Cui Dongshu, secretary‑general of the China Passenger Car Association (CPCA), the overall profit margin of China’s passenger‑car industry fell to 4.4% for the January‑November 2024 period. That figure is the second‑lowest in the sector’s history, just 0.1% above the 4.3% recorded in 2024.
Profit Margin Figures
The average revenue per vehicle reached 322,000 yuan (about US$45,800), yet gross profit per car slipped to only 14,000 yuan (roughly US$2,000). In total, industry revenue topped 10 trillion yuan (US$1.42 trillion), an 8.1% year‑on‑year increase. However, total costs surged to 8.84 trillion yuan (US$1.26 trillion), up 9%, squeezing net profit to 440.3 billion yuan (US$62.6 billion), a 7.5% rise.
Rising Cost Pressures
The cost side of the equation is expanding faster than sales. A 9% increase in industry‑wide expenses outpaced the 8.1% revenue growth, driven by volatile raw‑material prices for batteries and higher labour costs. These headwinds are eroding margins across the board.
Intensifying Competition Between Powertrains
Competition between new‑energy vehicles (NEVs) and traditional gasoline models is heating up. Price wars that began in the NEV segment are spilling over into the conventional market, further compressing profits.
Case Study: Great Wall Motor
Great Wall Motor (GWM) illustrates the dilemma. In the first three quarters of the year, GWM’s revenue grew nearly 8%, but net profit fell by about 17% as the company poured money into its distribution network and battled aggressive pricing.
Dealer Landscape
According to Autohome, more than half of Chinese car dealers are operating at a loss, and over 70% of vehicle models are being sold below cost.
November Snapshot
In November alone, industry revenue hit 1.1445 trillion yuan (US$163.3 billion), up 9.7% YoY, while costs rose 11.4% to 1.0162 trillion yuan (US$145 billion). Profit surged 39.2% to 50.8 billion yuan (US$7.2 billion), giving the month a profit margin of 4.4%—an improvement from 3.9% in October and well above the 3.3% recorded in November 2024.
Production Numbers
From January to November, 31.09 million vehicles were produced, an 11% increase year‑on‑year. Of these, 14.53 million were new‑energy vehicles, up 27% and capturing a 47% market share. Gasoline‑powered car production held steady at 16.57 million units.
Outlook
The data paints a mixed picture: robust sales growth is being offset by escalating costs and fierce price competition. Whether the industry can lift profit margins will depend on how quickly manufacturers can stabilize input costs and differentiate their offerings in an increasingly crowded market.