Sime Darby Will Close Unprofitable Car Outlets In China

Photo: Sime Darby. In response to Chinese automakers' excess production that has resulted in an oversupply, Sime Darby Bhd says it will close some unprofitable locations in China, The Star has reported.
According to Group CEO Datuk Jeffri Salim Davidson, the branches involved will be a long way from profitability due to the current situation.

"There is a lot of work going on in China, about how we manage the situation. You will notice we made a bit of a provision in June and a lot of it is around a big review of our China operations. However, he gave assurance that Sime Darby will not be leaving the market as it is a “long-term player" in the auto industry and that the Chinese economy is currently in a slump.

In the fiscal year that concluded on June 30, 2024 (FY2024), Sime Darby's motor division in China reported a loss of RM123 million. As a result, the division's profit before interest and tax (PBIT) decreased to RM584 million from RM1.05 billion the year before, a 44.5% decrease.

Sime Darby blamed fierce price competition that hurt its vehicle margins for the downfall of its China automotive operations. Apparently, Sime Darby is not the only business experiencing losses in the Chinese market. More than half of new car dealerships in China suffered financial losses in the first half of this year, according to a survey conducted by the China Automobile Dealers Association, as reported by Automotive News China. For the record, Sime Darby's wholly-owned subsidiary Sime Darby Motors became the exclusive importer and distributor of BMW automobiles and motorcycles in Hong Kong and Macau in 1972.

Over time, it has added additional luxury brands like Rolls Royce, Lamborghini, and McLaren to its network of brands. Along with growing its dealer network, it now boasts over 40 locations throughout China, including major cities like Beijing, Shanghai, and Shenzhen.