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CN Official Media Article: 'Extreme Price Pressure' To Eventually Harm Suppliers, Automakers
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A recent mail addressed by a person in charge of a Chinese car company has aroused concern, Chinese official newspaper The Economic Daily reported. The mail asked suppliers to reduce the prices of their products by 10% starting from 2025, while the suppliers who received the mail expressed “strong dissatisfaction”. From a deeper perspective, the “convention” of the “annual price reduction” is that the 10% “extreme price pressure” by car companies this time has broken the bottom line of most suppliers' prices, and awakened a feeling of revulsion against the “involution” of vicious competition. Since last year, the automobile industry has become more competitive than ever. After several rounds of price cuts, not only have most car companies increased their revenues without making a profit, but the profits of suppliers are also as thin as razor blades. The article pointed out that there is nothing wrong with automakers craving to enhance the competitiveness of passenger vehicles, but the enhancement of competitiveness should mainly harness product technology innovation, quality improvement, brand building and service enhancement, rather than the bottom line of the price war. In fact, price wars are a double-edged sword, the article opined. If car companies compete excessively and rely on price pressure to force suppliers without restraint, and suppliers reduce costs at the expense of jerry-built materials, the quality of products can hardly be guaranteed, which ultimately hurts not only the suppliers, but also automakers. AAStocks Financial News |
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