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Automakers Panic about China Market Turmoil

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Published on : Sep 07, 2015

About a decade ago, car sales in China equaled 6 million each year. This was about less than one tenth of the vehicles that were sold worldwide.

By last year, due to an explosion of wealth in the middle and upper middle class population, the car sales rose to almost 24 million vehicles. This accounted to more than twenty five percent global sales of vehicles, which accounted for huge profit share for major automakers. In China, cars are regarded as a key symbol of success.

This is the reason automakers such as General Motors, Volkswagen, and Ford are watching the commotion in China’s economy and fearing apprehensions about the stock markets. 

The situation in the auto market in China will have a direct impact on the automakers globally, as stated by John Hoffecker, vice chairman and head of automotive practice at Alix Partners.

Automakers like Mercedes, GM, and BMW that had earlier presence in China reaped significant rewards in this market. 

As per analysis presented by Alix Partners, 35% of global sales and 44a5 of profit of GM are reported from China. The Buick brand of the company is specifically dependent on sales in China, which totaled to 919,582 in 2014, which were 228,963 for the same year in the U.S.

Since the beginning of 2015, the sales of Buick have dropped by 1% in china, but the plunge is on the rise with a drop of 7% in July 2015 compared to July 2014, as per LMC Automotive, which is a market research firm.

In the first seven months in 2015, sales of Chevrolet dropped 16%, which equaled to 346,184, as stated by LMC.

However, cars sales in China slowed after a period of fast growth, which is not related to the recent market slump.