China’s First Car Slump in Decades Puts Weakest Brands at Risk

(Bloomberg) -- China's slowing car market may spell the end for some of the country's worst-performing manufacturers, said the head of one of the country's biggest state-run automakers.

The sales decline is set to trigger consolidation among local automakers and the disappearance of certain brands, Beijing Automotive Group Co. Chairman Xu Heyi told reporters at the Geneva auto show.

“Some weaker ones might be gone,” said Xu, who's also chairman of BAIC Motor Corp., the Chinese partner of Daimler AG. Increasing cost pressures will lead to more cooperation among automakers and parts suppliers, he said.

China Car Slump Has Dealers Slashing Prices, Giving Cheap Loans

Separately, Xu said Tesla Inc. is set to have a “very big impact” on China's new-energy vehicle sector when it begins production there, and that Zhejiang Geely Holding Group Co.'s ties with Daimler haven't hurt BAIC's relationship with the maker of Mercedes-Benz cars.

China's auto market contracted for the first time in two decades last year as the world's second-largest economy slowed and an unresolved trade war with the U.S. weighed on consumer spending. With sales continuing to decline, manufacturers and dealers are resorting to generous discounts to lure buyers.

So far, demand for luxury vehicles from BMW or Daimler's Mercedes-Benz have been less affected by the downturn than local mass-market nameplates.

BAIC showed the battery-powered Arcfox-GT high-performance car in Geneva and a design concept for a sport utility vehicle. Both will go on sale in Europe as early as next year, Xu said. There's no plan to enter the U.S. market.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Young-Sam Cho at ycho2@bloomberg.net, Angus Whitley

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