Why Did Brilliance Auto Go Bankrupt?
2 Answers
Brilliance Auto's bankruptcy reasons are as follows: 1. Competition in the automotive industry: With social development, competition in the automotive market has become increasingly fierce and brutal. Under such competitive conditions, Brilliance Group's economic performance and operational conditions continued to deteriorate, ultimately leading to insolvency and necessitating bankruptcy restructuring. 2. Over-reliance on BMW Brilliance: In recent years, Brilliance Group has been overly dependent on BMW Brilliance, though this was unavoidable. Relying solely on BMW Brilliance could not pull Brilliance Group back from the brink of bankruptcy, and this situation ultimately led to the group's collapse. 3. Impact of the pandemic: The debt-ridden group, further affected by the pandemic, saw its financial condition worsen significantly, accelerating its bankruptcy to some extent.
As someone who has long followed the automotive industry, I believe the core issue behind Brilliance Auto's bankruptcy was excessive debt pressure. They expanded too aggressively, taking on massive debts for initiatives like new factory investments and marketing campaigns, but their own brands such as Jinbei and Zhonghua couldn't sell well, with razor-thin profit margins—relying mainly on dividends from the BMW Brilliance joint venture. When market conditions shifted and sales declined, cash flow couldn't keep up. With an overstretched capital chain, they even struggled to pay supplier bills. Once debt defaults hit in 2020, the whole operation collapsed. This reminds me of other automakers' cases, serving as a warning that businesses shouldn't rely solely on borrowed money for growth—maintaining financial balance and risk control is crucial, or they risk falling into pitfalls. Financial health is the foundation of corporate survival, and reckless expansion invites disaster.
