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2025-05-28 China-Japan-Koreas
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Who Is “Evergrande 2.0” in China’s Auto Sector?
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[X]
That question has been making waves across Chinese business circles. The chairman of Chang’an Auto—China’s third-largest carmaker—recently stated that an “Evergrande” already exists within the auto sector. His comment points to deeper concerns about inflated sales figures and unsustainable financial structures in the country’s booming electric vehicle (EV) industry.
https://yicaiglobal.com/news/changan-autos-chief-says-claims-of-evergrande-like-risks-in-auto-sector-highlight-need-for-stronger-control
Evergrande Group, once China’s largest property developer, collapsed under the weight of excessive leverage and was later found to have committed one of the most significant corporate frauds in Chinese history—artificially inflating revenues by approximately USD 78 billion over two years. The fallout triggered widespread panic and continues to ripple through the property market.
A similar debt-fueled reckoning may now be brewing in the auto sector. Many of China’s leading EV players operate with alarmingly high debt-to-asset ratios, far exceeding those of global peers. For context, Germany’s auto giants—Mercedes-Benz, BMW, and Volkswagen—maintain debt ratios of 20–40%. Tesla, the global EV benchmark, sits at just 7%.
By contrast, here’s how China’s major automakers stack up:
Company Debt (USD B) Debt Ratio (%)
NIO 13.1 87.0%
Li Auto 12.6 56.1%
XPeng 7.1 62.2%
Seres 11.3 87.4%
Geely 70.2 88.0%
Chery 24.3 88.6%
Chang’an19.2 62.2%
BYD 82.7 77.9%
These figures raise serious concerns. Companies like Geely, Chery, and BYD are operating with debt ratios that approach levels typically considered unsustainable—especially in an industry prone to economic cycles and rapid technological change.
Conclusion:
The warning signs are hard to ignore. A sector flush with state subsidies and political momentum can still derail without financial discipline and credible oversight. Inflated figures, weak governance, and unsustainable borrowing led to Evergrande’s collapse. The risk now is that China’s EV industry—driven by ambition and national pride—could be repeating the same costly mistakes. 
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Posted by 3dc 2025-05-28 08:53||
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File under: Commies
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Posted by Pancho Poodle8452 2025-05-28 18:47||
2025-05-28 18:47||
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