The important Auto China 2012 show has allowed many large manufacturers to increase their commitment the People’s Republic. This is based on the fact that it is the world’s largest market for cars and light truck with sales of 18 million last year.
What has not been mentioned much is that the investments may not return capital as expected. China’s auto market growth has stalled, and local companies have become more powerful competitors to share leaders GM (NYSE: GM) and VW.
This leaves little room for the next tier of manufacturers which include Ford (NYSE: F) and Toyota (NYSE: TM). The press has remarked that there are a number of SUVs and luxury cars on display at Auto China 2012. The upper class in China continues to grow quickly, and with it the appetite for cars from Mercedes, Audi, and BMW. None of these firms wants to say it, but each has to offer discounts to gain sales. That is a sign that vehicle demand, even at the high end of the China market, has flagged.