Foreign car manufacturers continue to invest money into factories being built in China, the world’s largest car market, even if the economy is scoring the lowest point in the past 25 years in terms of sales growth.
Market leaders, Volkswagen AG and General Motors are not giving up on their planned investments, with Toyota Motor and Ford Motor also going for new expansion plans in China. This is all taking place with sales growing only 3.9% in the first quarter of this year, compared to 9.2% last year and under the 7% growth that was estimated by the China Association of Automobile Manufacturers for this year.
Many of the foreign automakers set to invest in self expansion in China have unveiled new products for this auto market at the Shanghai Auto Show, including Ford’s redesigned Taurus sedan. According to James Chao, Asia chief of IHS Automotive, if the economic situation remains the same or goes even lower for the rest of the year, global car manufacturers might have to reconsider their plans to expand in China.
A number of foreign auto makers are doing well on the market despite its downfalls – for example, Ford has registered a 9% rise in sales over the first quarter of 2015.
Chao added that “It’s still a tale of two worlds, with domestic manufacturers probably hovering around 60% capacity and the international joint ventures at 80-85%. It’s a big difference.”
An annual Canadian study of automakers’ outlays reveals that China accounted for more than half the total industry spending on new or expanded capacity in 2014, and that it has plant investments worth $12.7 at the moment.
By Gabriela Florea