China Auto Sales Plummet, Which Is Not Good News For General Motors
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General Motors has slowly retreated from unprofitable markets around the globe. Once an automaker that spanned nearly every corner of the world, GM largely focuses on North America and China today. And China auto sales could be in for a historic drop.
Bloomberg reported Friday that passenger-car purchases by dealerships declined 12 percent, which leaves the entire market up just 0.6 percent for the entire year. The figure is a stark contrast of years of intense growth, which has led to nearly every automaker investing millions to shore up their presence locally.
The China Association of Automobile Manufacturers said it sticks by its prediction that sales will still grow through the end of 2018. However, the escalating U.S.-China trade war has kept Chinese consumers out of dealerships as companies pass on price increases. The U.S. most recently levied another 10 percent duty on $200 billion worth of Chinese goods. The country responded with a fresh round of tariffs on $60 billion worth of U.S. goods.
Many automakers have warned the Chinese market will likely hurt profits, and some have already begun idling plants to reduce inventories as demand for new cars slumps.
General Motors reported a 15 percent decrease in sales since the trade war began escalating this past July, and a slowing auto market comes as the automaker prepares for a variety of new electric cars in the market. GM will introduce 20 new electric cars by 2023, and although the company hasn’t confirmed where the cars will launch, China is ripe for an expanded EV portfolio. The government will begin enforcing electric-car quotas if automakers want to continue doing business in the country.
If China auto sales end the year with a slump, it would be the first contraction in the market since the 1990s.
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Well, entering in a trade war with China and not delivering more electric cars is a good recipe to generate such a decline.
Chances are this is just the beginning…
With the trade war, what is keeping this proud country from turning their own brands into legitimate contenders and saying good bye to GM for good?
The Koreans turned Hyundai, Kia from junk to respectable in little time, I’m guessing the Chinese could do the same and they wouldn’t even have to rely on the export market.
They are now focusing on their own market of 1.4 B people. 4 X the population of the US.
Auto sales down, double digits.
Trade deficit hits all-time monthly high in Sept ($34.1b) – China’s exports to the US were up 15% – US exports to China down 9%.
Seems the trade war is off to a rocky start.
didn’t one of the writers on this blog say that gm didn’t make that much money in china since they have to split the profits with their chinese partner?
if that is the case, this slowdown shouldn’t matter that much.
Except that it does matter a lot. The US being a zero growth market, GM’s future is totally focussed on Asia.
GM has invested billions in China and has transferred processes and technology to build the Chinese industry which will now compete against Western companies and put many out of business.
China could nationalize all American companies tomorrow if they wanted. You don’t FRUCK with a Communist dictatorship unless you are willing to take huge losses. China could bankrupt the largest company on the planet by stopping all future shipments of Apple which makes 100% of their products there. The US military can’t function without Chinese electronics and chips. The USA is so vulnerable and dependant. Trade wars are easy to win says the guy who went bankrupt 6 times… LOL
Ya – GM and SAIC do a 50/50 split. And the margins on Cadillac, I guess, aren’t as generous as they are in NAm.
No idea what the numbers are on the tariff situation. But whatever they are, it’s likely not good.
Ford got hammered, too. Minus 40%.
Ford is in really rough shape in China. War has erupted with their Chinese partner which is now seeking the help of the communist party. That can’t be good. Ford may be the first to leave China.
Now that the Western world’s corporations and governments have built up China in the hope of massive profits, there’s a problem…
Reality check, China is a communist dictatorship and not a capitalist democracy. Sun Tzu, The Art of War is actually a manual in the art of deception.
https://freebeacon.com/national-security/bolton-warns-chinese-military-halt-dangerous-naval-encounters/
Profits from China, (GM’s portion), have been around $2 billion per year. No doubt we will see continued monthly weakness until something is worked out on trade. Although, the Chinese Government could cut sales taxes on new vehicles from 10% to 5% or 0%, to help mitigate sales weakness, just like they did several years ago before increasing them back to 10%.
China is still a very big growth story, and 12%-15% sales weakness over the last quarter may not lead China into a true sales plummet.
This trade and tariff issues continue to increase pressure on both the U.S. and China. Ever increasing negative feedback from industry leaders is pressing Trump and Chairman Xi to go back to the negotiating table in November.
GM gone from Indian market for efficiency reason but they could still be present with a national dealer or distributor. The same for South Africa, Russia Europe and North Africa.