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Lear Corporation to be Affected by the Downfall of Automotive Sales in China

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Published on : Aug 28, 2015

Lear Corporation, dealing in auto supplies such as electrical interiors and seating, is expected to face the impact of slow growth of the worldwide economy. Lear Corporation is a well-known player in the automotive industry, which supplies auto parts to many auto manufacturers from across the globe. Lear's business wholly depends on the demand for vehicles globally. With a downfall in economic conditions in China, continuous volatility in emerging markets, and slower growth of the auto market in the U.S., Lear Corporation has faced many challenges in the recent past.
The appreciation of U.S. dollar with respect to certain important currencies has led to the downfall of Lear's auto market. The company observed only 1% growth in net sales in 2014. Global slowdown in sales of vehicles may also affect the auto market of Lear. China contributed around 12% to Lear's net sales in 2014. This year, the contribution has gone through a major slowdown due to weaker economic conditions because of downfall in the stock market, negative buyer sentiment, and overcapacity of the industry. 

Lear serves the needs of auto supplies of many global players such as Ford, GM, Daimler AG, Hyundai Motor Company, and BMW. China's local auto manufacturers contribute around 40% of auto seating business. Lear, being a strong market player in the auto industry, has a good chance to strengthen their position by focusing on their growing market share. 

Substantial increase in China's disposable income, downfall in the stock market, and increase price consciousness of customers has resulted into increase in sales of most of the budget vehicles. With oil prices remaining low, the disposable income may get a push. Improvement in the job market and housing sector may also lead to the growth of auto industry globally. With this, Lear might get back in better position, in coming few years. 

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