Analysis: Liability rates in the Chinese automobile industry

Gasgoo.com (Shanghai) - With news that Geely Automobile Holding Group's liabilities has reached 73 percent, many in the media have voiced their concern about the state of the automobile industry. However, Geely soon put out a statement saying its liability rate was well within normal limits, pointing out that large Western automobile manufacturers generally have rates between 70 and 80 percent. Gasgoo.com (Chinese) took advantage of the story to further analyze liability rates among Chinese manufacturers.

While the ideal liability rate is highly debatable and varies among industry, it is generally held that around 60 percent is the ideal number. However Geely's statement that 70 to 80 percent is a good rate for the automobile industry can be backed up, with VW, BMW, Daimler, PSA and GM having rates of 75 percent, 78 percent, 72 percent, 79 percent and 73 percent respectively. According to Gasgoo.com's research, the average liability rate among 25 of China's major automobile manufacturers is 61.8 percent, .1 percent higher than in 2009.

The statistics interestingly reveal that commercial vehicle makers have liability rates higher than their counterparts manufacturing passenger vehicles. Sinotruck, King Long and Yaxing all had liability rates of over 70 percent in 2010, with Foton and Shuguang joining them in 2009. Meanwhile, the passenger vehicle manufacturer with the most liabilities, Shanghai-based SAIC, had a rate of 64.3 percent.