China’s automotive sector posted a historic 4.4% profit margin in 2024, the lowest ever, as rising costs and fierce price wars squeeze earnings. Find out why.
According to the latest data released by Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA), the Chinese automotive sector posted a profit margin of just 4.4% for the January‑November period of 2024. This is the second‑lowest figure on record, barely above the 4.3% margin seen in 2023.
Profit figures in plain numbers
The average revenue per vehicle across the whole industry reached 322,000 yuan (about US$45,800), but gross profit per vehicle slipped to only 14,000 yuan (≈US$2,000). Total industry revenue topped 10 trillion yuan (US$1.42 trillion), up 8.1% year‑on‑year, while costs surged to 8.84 trillion yuan – a 9% increase. Net profit settled at 440.3 billion yuan (US$62.6 billion), a 7.5% rise.
Rising costs and fierce price wars
Two main forces are squeezing margins. First, cost growth outpaced revenue: a 9% jump in expenses versus an 8.1% rise in sales. Fluctuating raw‑material prices for batteries and higher labour costs are major contributors.
Second, competition between new‑energy vehicles (NEVs) and traditional gasoline cars has intensified. Price battles that began in the NEV segment have spilled over into the gasoline market, further eroding profitability.
Impact on major players
Great Wall Motor (GWM) exemplifies the pressure. In the first three quarters of the year, GWM’s revenue grew close to 8%, yet net profit fell almost 17% as the company boosted spending on distribution channels and faced cut‑throat price competition.
Industry data from Autohome shows that more than half of dealerships are operating at a loss, and over 70% of vehicle models are being sold below cost.
Monthly snapshot – November 2024
November alone saw industry revenue of 1.1445 trillion yuan (US$163.3 billion), up 9.7% YoY, while costs rose 11.4% to 1.0162 trillion yuan. Net profit jumped 39.2% to 50.8 billion yuan (US$7.2 billion). The profit margin for the month improved to 4.4%, up from 3.9% in October and markedly higher than 3.3% in November 2023.
Production volumes and market mix
From January to November, 31.09 million vehicles were produced, an 11% increase over the same period last year. Of these, 14.53 million were new‑energy models – a 27% rise – giving NEVs a 47% market share. Production of gasoline cars held steady at 16.57 million units.
Outlook
Analysts warn that unless cost growth can be curbed and price wars moderated, profit margins may stay under pressure. The shift toward NEVs continues to reshape the competitive landscape, but it also brings higher material costs that manufacturers must manage.
For investors, policymakers, and auto enthusiasts, keeping an eye on cost trends, subsidy policies, and pricing strategies will be key to understanding the future health of China’s car industry.