Since China’s economic downturn and stock shares falling, China is not headed towards any good news too soon.
According to the Chinese Automobile Manufacturers Association, in July car sales went down 7.1% to a 17-month low, while Volkswagen also witnessed a 13% drop.
BMW’s Chinese partner, Brilliance China Automotive Holdings, also reported a 45% decline in the first half of the year, with significant decline in sales also to be registered soon by General Motors, Volkswagen, BMW and other global carmakers. SAIC Motor Corp., which has joint ventures with GM and VW, too, stated that the situation will not improve in the close future.
Besides the economic uncertainty at the moment in China, car makes are worried about the upcoming 12 months which might stand for 2 million units of additional production capacity.
Ford and Volkswagen with their Chinese partners have just opened plants there, and Ford has bought a locally owned car factory that will start functioning in 2016. Moreover, Renault and Peugeot Citroen will open up new plants in China with their partners and GM and SAIC are also going to start an assembly at a new Cadillac plant beginning next year.
A separate GM partnership with SAIC and Wuling will also open a plant for electric cars and hybrids. FCA is also supposed to start its Jeep production in 2016 together with its partner, Guagzhou Automobile Group Co. Hyundai has also added two more plants to the Chinese table, one in Changzhou in April and another one in Chongqing in June.
Ron Harbour, a partner at the consulting firm Oliver Wyman and publisher of the Harbour Report said that “There’s a high level of anxiety among the OEMs right now. There’s been a new assembly plant opening about every nine or 10 months, and a lot are in a state of construction.”