The remarks made by Great Wall Motor's chief about risks of companies in China's auto industry ending in a similar situation to property giant Evergrande Group aim to highlight the need for stronger risk management, according to the chairman of Changan Automobile.
All industries face risks during development, so Changan Auto has consistently prioritized balancing growth with safety, Zhu Huarong said during a shareholder meeting yesterday. The firm's strategies ensure that "stability comes first," he added.
"This is our responsibility to the company and the millions of customers relying on our supply chain," Zhu noted. The long-term survival of a firm requires building top-tier brands and expanding globally while mitigating overseas risks, he pointed out.
In an interview with Sina on May 23, Wei Jianjun said there may be an Evergrande-like situation in the auto industry, referring to the developer falling into a debt crisis in 2021. An industry-wide audit could expose financial vulnerabilities, he noted.
Intense competition does not spell doom for an industry, Zhu said. Many sectors endure painful phases before returning to healthier growth, and with capital markets becoming more rational and operations more stable, China's auto industry will likely enter a more sustainable phase within two years, he added.
On May 27, Zhu said that updates regarding the restructuring of state-owned carmakers Dongfeng Motor and Changan Auto will be made through official channels.
The restructuring will better position Changan Auto for future internationalization, globalization, and market-oriented development without altering its established strategic and technological roadmap or changing its brands, policies, or long-term strategies, Zhu noted.
Wei made his remarks after a wave of price cuts across the industry. BYD slashed prices by up to 34 percent on 22 models on May 23, with Geely Automobile Holdings, Cadillac, Leapmotor, IM Motors, Changan Auto's new energy vehicle brand Deepal, and Nissan Motor following suit, leading to Chinese automobile stocks tumbling on May 26.
