The public has a debt of 3.2 trillion, Toyota has a debt of 2.6 trillion, how much debt do Chinese car companies have?

In 2024, China's automobile exports once again topped the global rankings, surpassing Japan for two consecutive years. Also in the same year, both BYD Company Limited and Geely made record-breaking entries into the top ten global automobile sales. All these phenomena indicate that the momentum of China's automobile development is becoming stronger. On the other hand, there have been many voices online targeting some Chinese car companies with malicious intent, focusing not on the continuous growth in sales, revenue, and research and development, but instead on the high levels of debt. There are even overseas short-selling institutions that release reports pretending to be rational analysis, forcibly labeling BYD Company Limited as "highly indebted" in an attempt to shake market confidence and profit from short selling the stock price. Returning to the topic, what is the debt situation of top overseas car companies? Are Chinese car companies highly indebted? This time, we will delve into the annual reports of top domestic and international car companies to find the answers in the financial data. "Volkswagen + Toyota" Debt = 6 Trillion As a capital-intensive industry, the automobile industry requires large investments in factory construction and continuous research and development. From a global perspective, the total debts of mainstream car companies both domestically and internationally are relatively high, and the larger the enterprise scale, the higher the operating income and total debt. Financial reports show that in 2023, Volkswagen Group had operating income of 2.5 trillion yuan, with total debt reaching 3.2 trillion yuan, 28% higher than operating income at the same period; Toyota had operating income of 2.1 trillion yuan, with total debt reaching 2.6 trillion yuan, 24% higher than operating income at the same period. Just the total debt of Volkswagen and Toyota, two top car companies, reached nearly 6 trillion yuan, while Ford, General Motors, BMW, Mercedes-Benz, and other car companies also had total debts exceeding trillions. It can be seen that the total debts of overseas mainstream car companies are in the "trillions", at a relatively high level. In contrast, the total debts of domestic car companies are not high. Taking BYD Company Limited as an example, in 2023, its sales volume was approximately one-third of Volkswagen's, and the total debt was only one-sixth of Volkswagen's. Overseas Car Companies' "Love" for Interest-Bearing Debt It should be noted that total debts of enterprises can be further divided into interest-bearing debts and non-interest-bearing debts. Interest-bearing debts refer to debts borrowed from financial institutions and issued in the capital market, requiring payment of interest, while non-interest-bearing debts refer to operating debts without interest costs, such as supplier payments, employee salaries, and taxes. In simple terms, this can be understood as the difference between car and housing loans at home and daily living expenses. The risk factors that are more difficult to control are the former, that is, interest-bearing debts. From the data, it can be seen that the interest-bearing debts of overseas mainstream car companies are very high. In 2023, Toyota had interest-bearing debts of 1.7 trillion yuan, accounting for 67% of total debts; Volkswagen Group had interest-bearing debts of 1.1 trillion yuan, accounting for 34% of total debts; Ford had interest-bearing debts of approximately 1.08 trillion yuan, accounting for 65% of total debts; General Motors, Mercedes-Benz, BMW, and Stellantis also had interest-bearing debts in the range of hundreds of billions. Some analysts believe that overseas car companies are inclined to rely on interest-bearing debts for financing because, on one hand, they have experienced a long period of low-interest rates in Europe, the United States, and Japan, leading to very low loan interest rates; on the other hand, some overseas car companies have large automotive finance businesses, resulting in significant financial claims. In contrast, the interest-bearing debts of domestic mainstream car companies are significantly lower. Geely Holding's interest-bearing debts are 108.2 billion yuan, accounting for 24% of total debts; BYD Company Limited's interest-bearing debts are 30.3 billion yuan, accounting for only 6% of total debts. If interest-bearing debts can better reflect the real debt pressure of enterprises, does this mean that the debt risks of overseas car companies are greater than those of domestic car companies? The Truth about Accounts Payable From the financial reports, it is apparent that the total debts of overseas car companies consist more of interest-bearing debts, while domestic car companies have more non-interest-bearing debts. Within non-interest-bearing debts, the majority comprises supplier payments that have not yet been due for payment, which primarily appear as accounts payable in financial reports. Here, it is important to clarify a misconception that simply comparing accounts payable does not accurately reflect the scale of unpaid supplier payments. The reason is simple: the larger an enterprise's scale, the higher its operating income, the larger the volume of external procurement and cooperation, and the more significant its role in driving economic growth. Furthermore, suppliers tend to prefer cooperating with top car companies that have large scale, high sales volume, and stable profitability, because the certainty of orders is guaranteed, resulting in lower risk costs for them. Therefore, by measuring the proportion of accounts payable to operating income, a lower ratio indicates that the proportion of unpaid supplier payments relative to the enterprise's revenue scale is lower. From the data, although SAIC Motor Corporation's and BYD Company Limited's accounts payable amounts are at the highest level among domestic mainstream car companies, their proportion to operating income is the lowest. This indicates that, relative to their large revenue scale, the proportion of unpaid supplier payments is actually the lowest. In addition, comparing the payment terms between domestic mainstream car companies and their suppliers, Changan has 185 days, Great Wall Motors has 163 days, SAIC Motor Corporation has 140 days, and BYD Company Limited has 128 days. Companies like SAIC and BYD Company Limited, which have stable orders and fast payment collection, are undoubtedly the preferred partners for suppliers. Conclusion: Through examining the truth of enterprise operation through financial data, we can clearly see that the total debts of domestic mainstream car companies are not as high as indicated online, on the contrary, the debts of top overseas car companies exceed many people's expectations. Therefore, the remarks criticizing the high risk of BYD Company Limited and other Chinese car companies based on high debts are obviously groundless, and talk of bankruptcy is even more baseless. Of course, the market's eye is sharp, even though there are always people online who are accustomed to being pessimistic, even though overseas short-selling institutions work hard to short-sell, they cannot stop the continuous rise in China's automobile sales or the sustained improvement in business performance, as strength is the most effective means to counter doubts.