Blogger reveals that car companies have been pushing down prices on the supply chain to a crazy degree: if the leaders are not satisfied with the price, they will immediately re-tender

On September 11, it was reported that a blogger recently revealed that car companies or OEM manufacturers have reached a crazy level of price reduction in the supply chain.

For example, if the leader is not satisfied with a price that has just been negotiated, he can immediately call for a tender and slash the price again. It’s either do it or get out.

For suppliers, if they do not do this, workers' wages will still be paid, equipment depreciation cannot be amortized, and cash flow pressure is huge, which will result in huge losses.

If you do it, there will be no profit, but you can feed your workers, amortize the depreciation of equipment, and start cash flow. However, this is a situation of continuous bleeding. If you can't outlast your competitors, you will end up outlasting yourself. China's NEV automotive supply chain is entering the "final crazy stage."

In addition, other media reported that in recent years, the domestic automobile industry has grown rapidly, but market competition has become increasingly fierce. In order to control costs, automobile companies have turned their attention to upstream manufacturers.

Data shows that the average profit margin of China's automobile industry fell to 5.0% in 2023, a decrease of 0.7 percentage points from the previous year, and even failed to reach the average profit margin of industrial enterprises.

Some auto parts suppliers are suppressed by the strong bargaining power of automakers, who demand that suppliers cut prices significantly, even to below the cost line.

Moreover, because the accounts have not been settled, after the contract is signed, the delivered parts will also be subject to the newly signed lower price, which will put greater operating pressure on parts manufacturers.

Some industry insiders pointed out that after car companies are unable to bear the cost burden brought about by price cuts, they will inevitably pass it on to suppliers, which will in turn affect service quality and ultimately user experience.