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China Auto Industry to Witness More Trouble down the Road

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Published on : Aug 31, 2015

According to news that is being reported about the China auto market, it is indicative of the market further worsening.

For the last few weeks, slow sales have been reported, greater price discounts are increasing worries to impact the profits. In this year in July, vehicles sales dropped by 7.1% which was a 17-monyth low, as stated by the Chinese Automobile Manufacturers Association. 

In the same month, the sales of Volkswagen declined by 13%.

The Chinese partner of BMW, Brilliance Automotive Holdings, recorded a drop of 45% in profit in the first half, with mounting fears that General Motors, BMW, VW, and other foreign car makers may take substantial hit to hit bottom line sales. 

SAIC Motors, which is in a joint venture relationship with VW, and General Motors commented that the situation in the near short term is not encouraging.

The turmoil of the world’s largest auto market is driven by uncertain economic conditions in the country and jitter stock markets. However, the concern of the auto industry is compounded with apprehensions for the next 12 months – an additional production capacity of 2 million units.

In conjunction with their Chinese venture, Volkswagen and Ford have recently opened new manufacturing units that are still in the process of ramping up. Further continuing, Ford has also taken over a local auto manufacturing plant which is expected to open production next year. 

In 2016, Renault and Peugeot Citroen have plans to open manufacturing plants with their partners. In addition, SAIC and General Motors are in plans to begin assembly at Cadillac from the beginning of next year. 

GM in a separate partnership with SAIC and Wuling is in plans to start a production unit for electric cars and hybrids. In 2016, in addition, Fiat Chrysler Automobiles is planning to start jeep production along with Guangzhou Automobile Group Co., which is its partner company.