In July, China’s new automobile sales experienced a decline of 5.2 per cent, marking the second consecutive month of decrease. According to the China Association of Automobile Manufacturers, a total of 2.26 million vehicles were sold in China last month, including exported vehicles. Domestic sales faced a significant fall of 10.1 per cent this year to 1.79 million units. Chen Shihua, the deputy secretary-general of CAAM, attributed the decline to a lack of consumer confidence and the impact of natural disasters.
New energy vehicles (NEVs) surpassed internal combustion engine models in July, accounting for 43.8 per cent of the total sales volume. Domestic NEV sales grew by 31.6 per cent to 853,000 units, while fuel-powered vehicle sales decreased by 34.1 per cent to 742,000 units. The crisis in the Chinese automobile market is also reflected in the struggles faced by the China Evergrande New Energy Vehicle Group (CENEVG), an electric vehicle production of Chinese Evergrande Group.
Recently, CENEVG has been involved in bankruptcy proceedings after individual creditors claimed the company was heavily indebted. Liquidators of CENEVG had mentioned seeking billions of dollars from the property developer’s executives, including its founder Hui Ka-Yan. The difficulties faced by CENEVG in finding potential buyers highlight the challenges faced by Chinese property developers amid the declining property sector revenues in the country.
Despite having discussions with potential buyers before the initiation of bankruptcy proceedings, CENEVG has not been able to reach an agreement. Lance Jiang, a restructuring lawyer from Ashurst, mentioned that any potential buyer must handle the domestic units’ creditors carefully and that the mainland court could initiate bankruptcy administration and introduce a strategic investor that could potentially eliminate the Hong Kong-listed New Energy Vehicle parent company from the equation. The situation of CENEVG reflects the broader challenges faced by the Chinese automotive industry in the current market scenario.
