Fierce competition has made it difficult for some Chinese car companies to survive. Most recently, Human Horizon has filed for bankruptcy in a local court.
According to a report from Autoindustriya on Tuesday (13/8/2024), Human Horizon is set to follow in the footsteps of other Chinese car companies that have already gone under, such as Weltmeister or WM Motor.
“Last year, the most well-known brand to file for bankruptcy was WM Motor. This year, Human Horizons, the parent company of the luxury EV brand HiPhi, has entered restructuring after experiencing prolonged financial difficulties,” said Autoindustriya.
It has been reported that Human Horizon is no longer selling HiPhi-branded electric cars, and production of these vehicles was halted as of February 2024.
CarNewsChina noted that Human Horizon tried to save the company by pursuing collaborations. Unfortunately, various acquisition deals with brands such as Avatr, owned by Changan, FAW, iAuto Group, and even investors from Saudi Arabia, fell through.
This situation aligns with research from Alixpartners, which predicts that many Chinese car companies will go bankrupt. Research cited by Carscoops indicates that out of the 137 brands currently in existence, only 19 Chinese car companies will remain. However, among these 19, only one is expected to be truly profitable.
“Alixpartners analysts predict that brands unable to generate profits will be forced out of the industry entirely or will have to shift strategies and focus only on a small segment of the car market,” wrote Carscoops.
The situation has been exacerbated by a price war strategy among Chinese car brands, with no signs of it slowing down. Dominant companies like BYD are believed to have margins that allow them to repeatedly lower prices.
“This squeezes competitors with smaller margins, who are forced to lower their own prices to survive,” analyzed researchers from Alixpartners.
This price war has already harmed several Chinese brands, including WM Motor, which filed for bankruptcy in 2023. Now, it’s Human Horizon’s turn to follow suit.
