Arab Today, arab today foreign carmakers still driven to invest in china
Last Updated : GMT 00:34:22
Arab Today, arab today
Arab Today, arab today

Foreign carmakers still driven to invest in China

Arab Today, arab today

Arab Today, arab today Foreign carmakers still driven to invest in China

Car sales
Paris - AFP

Foreign carmakers that raced into China to profit from what has become the world's biggest automobile market by volume have no intention of backing out despite slowing sales as the Chinese economy shifts down.

While maintaining their upbeat view of the market's potential in the medium-term, auto manufacturers have had to make some adjustments.

They have lowered their forecasts for sales growth in 2015 and some have expressed concern about a looming price war, and the shares of the industry's giants have been getting hammered on world markets.

Car sales, a traditional barometer of the economic climate, advanced in China by nearly 14 percent in 2013 and 6.9 percent in 2014.

This year the forecast is gloomy with analysts predicting a sales increase of around 3.0 percent as China's economic growth has slowed from 7.4 percent last year.

Economists put China’s first-half growth rate at around 6.3 percent, lower than the official 7.0 percent, according to a recent survey by Bloomberg News.

"I don't think we will see again the growth rates that we saw in the past," said Yann Lacroix, an expert on the automobile sector at insurer Euler Hermes.

The world's top carmakers all profited in the Chinese boom years. In 2014 Volkswagen sold 36 percent of its global production in China, General Motors 35 percent, PSA Peugeot Citroen 25 percent, BMW 20 percent and Mercedes-maker Daimler 16 percent.

But the current slowdown "does not affect the outlook for the Chinese market on the 2020 horizon, which remains excellent", said Flavien Neuvy, auto market analyst for Cetelem.

He pointed to the sustained expansion of the middle class in a country where many households are not yet car owners.

- 'Achilles heel' -

The world's number one carmaker Toyota, which has seen around 11 percent of its global sales in China, says at this stage it has not experienced any jolts from the country's stalling economy.

The US giant says it continues "to expect strong results in China for the rest of the year", while German auto kings Volkswagen and BMW have revised lower their sales growth estimates for 2015.

"Over the years, the German automobile manufacturers pulled out ahead of the competition, but now conditions are changing for them too," said Ernst & Young expert Peter Fuss.

"(Their) strong dependence on the Chinese market could turn out to be an Achilles heel," he added.

Another aspect of the Chinese market is the spectre of a price war and the need to adapt to new market conditions, according to PSA boss Carlos Tavares.

"Very soon we are going to be confronted with a new price war. To protect our margins and our shares of the market in the context of a price war, we need to anticipate cost reductions," he said back in July.

Since the start of the year in the domestic market, the cheaper all-Chinese made cars have surpassed the vehicles made by joint ventures. China requires all foreign automakers to form joint ventures with local firms.

"If you want to attract new clients in China, you have to veer more towards 'low-cost' vehicles," said Lacroix.

After years of euphoria over booming China, the abrupt slowing in the market threatens to lead to overcapacity in the factories, an unknown situation up to now, analysts say.

"The level of growth will be less and that is going to redefine investment policies" in industrial infrastructure, said Meissa Tall, analyst at Kurt Salmon consultancy, while also noting "we're talking about slowing growth, not a recession."

Joint-venture factories turned out cars at 94.3 percent of capacity in the first quarter of this year compared with more than 107 percent in the same period a year earlier, according to a study by research firm Sanford C. Bernstein recently cited by the Wall Street Journal. Plants can surpass capacity by adding extra work shifts.

That has not discouraged carmakers who still want a stake in this huge market.

Renault, which has been somewhat absent from China up to now, is building a factory in the central city of Wuhan set to open next year. Its CEO Carlos Ghosn recently said that he was aiming for 3.5 percent of the market "as a first step".

The turbulence in the Chinese economy won't change that, said a source close to Renault, which remains "calm and confident" about the future of its models on China's roads.

 

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today foreign carmakers still driven to invest in china Arab Today, arab today foreign carmakers still driven to invest in china

 



Arab Today, arab today
Arab Today, arab today Ideen Belmahdy happy to be part of “ Fashion Star”

GMT 17:00 2017 Sunday ,26 February

Ideen Belmahdy happy to be part of “ Fashion Star”
Arab Today, arab today Tourist guide explains types of tourism

GMT 18:28 2017 Saturday ,25 February

Tourist guide explains types of tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Ayat Abaza says state TV presented major stars

GMT 03:52 2017 Sunday ,26 February

Ayat Abaza says state TV presented major stars

GMT 06:57 2017 Sunday ,26 February

Huawei wins MRM Business Innovation Award

GMT 08:49 2017 Saturday ,25 February

Shell plans $300 mn investment in Argentina shale

GMT 05:40 2017 Saturday ,25 February

British Airways owner reports profit

GMT 15:19 2017 Thursday ,23 February

Companies' commitment to Bahrainisation quotas praised

GMT 14:48 2017 Thursday ,23 February

Etihad Airways Engineering signs deal with Kenya Airways

GMT 12:25 2017 Thursday ,23 February

Bharti Airtel buys Telenor's India operations

GMT 10:47 2017 Thursday ,23 February

Saudi Aramco may offer discounted shares to citizens
View News in Arabic - Business: أخبار الشركات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Ola Ghanem hopes to work with M.Ramadan

GMT 07:23 2017 Friday ,24 February

Ola Ghanem hopes to work with M.Ramadan
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 13:47 2017 Friday ,24 February

Rabia Fatima reveals role of "Facebook" in her career

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 10:20 2017 Thursday ,23 February

Brazil's top diplomat resigns

GMT 11:54 2017 Thursday ,23 February

Saudis await visitors but will they come?

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday