With the recent downturn in China’s auto economy and car sales plunging, it seems that General Motors Co. and Ford Motor Co. might have not made the wisest decision to invest in building infrastructure and marketing machines over there.
Who saves face in all of these economic twists? It’s Fiat Chrysler Automobiles N.V. which entered the Chinese market later than its competitors and has not made it very far up to this point. Moreover, this is how FCA managed to surpass Ford and GM at the stock market, which only brought bad news for the two American carmakers.
After a number of years in which growth was the main characteristic of the car industry, China’s auto market exceeded the U.S. in 2010. With predictions that the Chinese market would pass 20 million a year while the U.S. rested at 12 million, the opposite seems to have happened. A recent report from the Wall Street Journal said that the car sales in the U.S. will actually reach between 15 and 16 million this year.
Passenger car sales in China went down for a second consecutive month this July, scoring a 6.6% decline year-to-year. Moreover, foreign branded car-sales decreased 1.5% in comparison with a 4.8% rise year-to-year in the world’s biggest auto market.
Fiat Chrysler’s shares went up 39% this past year despite economic fluctuations. In the meantime, GM’s stock shares decreased 21% and Ford’s 25%. This year, Chrysler will have to depend very little on its success on the Chinese market in order to post boosted profits worldwide. The company might sell fewer than 250,000 cars on the Asian market in 2015 and still turn out profitable.
By Gabriela Florea