China's tight supervision of the heated price competition in the electric vehicle sector could spell lending pressure on mainland car manufacturers and push out weaker, debt-ridden carmakers, the South China Morning Post reported Friday, citing S&P Global Ratings.
"Financially fragile players that struggle to keep pace with government guidance will exit the market or be absorbed," the newspaper quoted S&P Global Ratings as saying.
Larger carmakers could benefit more from the competition, while tighter oversight would also mean a "leaner, more disciplined sector" but with probable failures and lost capital, the report said, citing the debt watcher.
Car makers in China relied on extended payment cycles to allow liquidity for research and development while absorbing the pressure of deep price cuts amid the fierce competition, the report said.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)