[ET Net News Agency, 5 June 2019] S&P Global Ratings said today that the Chinese
automakers it rates will benefit from the ongoing stimulus by the central and local
governments. These companies are all industry leaders with strong product offerings and
should be able to maintain their market positions and largely stable financial
performances over the next 12-24 months.
On the other hand, industry consolidation is likely to continue as competition
intensifies. Weaker players may, therefore, become targets or be driven out of the market.
"We expect the Chinese governments to roll out more stimulus this year to avoid a
double-digit slump that could otherwise occur," said S&P Global Ratings credit analyst
Stephen Chan. "Over the long term, the industry could regain its growth momentum, given we
expect China to catch up with developed countries in terms of car density."
The central government is targeting the automotive sector for support because it is an
important economic pillar. Boosting the industry could be a means for the government to
achieve its real GDP growth target of 6.0%-6.5% in 2019 at a time when the country is
transitioning to a consumption-led economy. (KL)