Impact: Cadillac purchases on hold due to China’s downturn image

The Chinese stock downturn could threaten the future of the world’s biggest car market, affecting the economic plans of companies such as Volkswagen AG and General Motors Co., owner of the Cadillac division.

The decrease in Chinese shares has led to a considerable slowdown in a previously high-performing market.

Zhu Kongyuan, general secretary of the China Auto Dealers Chamber of Commerce, a Beijing-based trade group, said that “Dealers are gritting their teeth. People won’t buy cars if they think their money bags will shrink. There are no magic tricks here.”

With worldwide automakers having invested billions of dollars into Chinese factories since 2000 to keep up with the rapid market growth, the Chinese business managed to surpass the US market in 2009.

The Cadillac CT6 is the brand's flagship and it expected to garner favor with Chinese buyers as well.
The Cadillac CT6 is the brand’s flagship and it expected to garner favor with Chinese buyers as well.

Due to the situation in China’s auto market, BMW AG had to lower this year’s profitability goals, while Toyota Motor Corp. said prices were deteriorating but sales were making a comeback. The recent car turmoil led to a number of Cadillac’s customers to ask to halt their ordered car deliveries.

Kang Peng, a sales consultant at a Cadillac dealership in Beijing, stated that customers “have been affected by the stock market and couldn’t come up with the funds.”

Companies like GM and Volkswagen are at stake in the Chinese business context each of them sells more than 30% of their vehicles in the country. Volkswagen and its Chinese joint venture partners are said to invest $25.2 billion in China by 2019, while GM and SAIC Motor Corp. venture would make a $15.6 billion investment by 2020.

Despite the uncertain Chinese market environment, Volkswagen Group China is hoping to maintain its position as automaker leader in the car business by holding onto its development plans.