China Growth For Major Car Companies Slows
It may turn out that China is not the Holy Grail for multinational car companies that they believed it would be. The world’s largest car market was supposed to offer the opportunity for corporations like Ford (NYSE: F) and GM…
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August showed a sharp slowing of sales for foreign car companies operating in China. GM’s sales rose only 19% to 181,625 when compared to August a year ago. According to The Wall Street Journal, Ford’s sales rose 24% to 44,047 and sales for Toyota Motor (NYSE: TM) were up 22% to 503,100.
The figures for the three car companies are odd because of the rapid growth rate of the overall market as posted by the Chinese government for August. The Journal says that light vehicles sales rose to 1.21 million, up 56% based on China’s numbers.
The US car companies are either bleeding sales in China, or the official government numbers are wrong as is often the case on the Mainland. GM must hope that its growth rate increases. The appeal of its IPO will be to some extent based on its Chinese figures.
There could be something else going on in China. Local car companies have begun to ramp up manufacturing using methods learned from firms based in the US, Japan, and Europe. The Chinese government, which owns a piece of all major car firms based there could certainly provide financial aid for their rapid expansion. Foreign companies may be faced with rising local competition more than with a car market in which growth has slowed considerably.
The European Chamber of Commerce recently complained that China is not a level playing field for outside companies. That may be right and car companies based overseas may be among those that learn that the People’s Republic will leverage its massive cash position to make sure it has a large share of any critical industry.
Douglas A. McIntyre
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
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McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.