Automakers reached the gas as China slows

Posted on 12/8/2014 3:18:21 PM

China quake bureaucracy, even a little panicked about the economic decline of the country. However, the voice of the global automakers as optimistic as before, which put a big bet on the largest car market in the world.

Last month, China's central bank unexpectedly cut interest rates to reverse the decline in growth in demand for cars has weakened.

However, international carmakers are still basically affected and placed behind large accumulations of instability capacity wisdom. Some people even say that sales were affected because they lack investment.


Matt Qian, president of GM China: "Our investment given the growth potential in this market, we believe it is a good location."

"The potential to advance our ability to ask," Matt Qian, president of GM China in October admit forum under the center of world automobile manufacturing center in China.

But, like many executives, Qian predicted to be a competitor of the company felt the squeeze, but not yours.

"Our investment given the growth potential in this market, we believe it is a good position," he said.

First blistering sales pace of China is rapidly cooled.

During the first 10 months, total vehicle sales rose 7 percent to 18.99 million units, the China Association of Automobile Manufacturers said. This compares with 14% of the increase for all 2013.

19 months to the lowest increase - - 3% again in October sales grew only 3% in September.

Slide to single digits can cause headaches for the automotive industry in the long run most intoxicating forecast investment growth. However, the international brand still believe that long-term commitment for expansion. They think it is more suited to the climate weaker than its domestic competitors temporary slowdown.

"It's an accumulation of it - and - coming attitude," Yuan Zhao, director of consultancy IHS Automotive Asia-Pacific, said.

To be sure, when sales increased productivity is a problem, especially for national brands such as Geely, Chery and Great Wall slowed. These companies are losing market share, international brand, and locked lower capacity utilization.

Capacity utilization represents approximately 65% of the national brands, 85% international, over estimates.

However, the general trend in China is all discouraged. Using the whole industry in China stood at 91% in 2010, but is expected to fall to 68% next year and 2020 remained around 70 percent, according to IHS Automotive.

In the United States, however, the current trend is the opposite. The utilization rate was 69% in 2010 and is forecast to be 95%, maintaining over 90% next year 2020.

"China has a serious excess capacity," said Zhang Xi neglected, Beijing Automotive Industry Holding Co., Ltd., or BAIC general manager, said the partner of Hyundai Motor and Daimler.

Increased capacity

However, almost all the global manufacturers continue to increase capacity. GM plans to plow $ 14 billion to China, 2014-2018 open five assembly plants. The expansion of the automaker is designed to provide a little less than 5 million sales in China.

Ford plans to use 300,000 of Chongqing later this year another plant with an annual capacity of 250,000 next year in Hangzhou, the capacity of the plant open.

These two manufacturers are accelerating even slipped momentum.

GM China sales in October rose 3 percent over the previous year. This is a jump of 12 percent in October 2013, China falling sales of Ford Motor Company of 1% in October up.

Not to be outdone, Fiat Chrysler and its joint venture partner, Guangzhou Automobile Group Co., Ltd., is under construction planning, production jeep when it opens next year, the second assembly plant in Guangzhou. Chrysler Fiat foresees a year to 850,000 vehicles in China in 2018, only 130,000 last year.

And Volkswagen AG are increasing investment in the first step, over the years, despite being exposed to the risks of slowing economic growth in China, 38% of the total quantity of sources.

In fact, instead of worrying about excess capacity, Ford and Volkswagen blamed weak sales of its latest production bottlenecks. "High utilization limits their sales," Chao said.

Demand is strong crossover and luxury cars. Global Brand specializes in these market segments is expected that sales of these higher margin products to increase in the coming years.

The demand for luxury cars in China to surpass the US next year. IHS predicted widened to 2.42 million vehicles per year in 2020, its 19 700, by comparing the estimated amount in the United States.

Automakers are also aiming to exploit new sources of revenue, including the financing of a new loan to purchase products.

Last year, about 20 percent of China's auto financing through the acquisition of 85% of the United States compared with PwC Autofacts. But deregulation is expected to stimulate the increase in auto loans and leases. Lease only for the next five years up to 25% growth this year, PwC predicted.

Size Matters

Sheer size of the Chinese market, which makes the car executives salivate. IHS predicts that sales of light vehicles in China will reach 35.22 million in 2026, 23 million this year. In contrast, the prospects of 16,570,000 in the United States in 2026, virtually unchanged from the level of this year.

China led surge in low penetration and expansion can afford the car fleet.

"You have not millions, but billions of people have money in their pockets in the future," Ralf Cramer, German supplier Continental AG to perform at head of China said the official. "We see a lot more in the future, higher requirements."

The cost of foreign manufacturers to gain ground locals. October, the market share of international brand rose to 62.2 percent, 2.3 percentage points from the previous month, compared to the previous year, sliced, participation of national brands is about 37.8% .

"If you look at the health of the entire automotive industry, which is highly dependent on the overall health of the economy," said general manager Qian. "I think the economy is very good management. Although there has been some slowing down. I think the slowdown has been a very, very healthy for the management approach."

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