Tuesday, October 28, 2008

D’oh: China Feels The Pain

Despite unmitigated appetite for anything that has wheels, the Middle Kingdom is no longer immune to the world’s motor malaise. Steelguru.com is an Indian website that tracks the steel market and that has a professional interest in anything that stamps and grinds that metal. They got ahold of Cheng Xiaodong, who is (get ready for this) “Head of the vehicle price monitoring arm of the National Development and Reform Commission” of China. That head opined that the Chinese auto industry is ripe for a big consolidation. That unsuspected revelation prompted Huang Zherui, analyst at CSM Asia in Shanghai, to likewise gaze in his crystal ball: "In a downturn, only strong players can survive, local carmakers may be hit the most by slowing demand as buyers of their vehicles have less purchasing power than motorists opting for higher end products." Wow. Who would have thought that?

No need to increase your sodium pentothal to see the truth: China’s Top Ten carmakers (SAIC, FAW Group, Dongfeng, Chang'an Automobile, Beijing Automotive, Guangzhou Automobile, Chery Automobile, Brilliance, Hafei Motor, and JAC) hold a combined share of 84% of China’s still chugging along car market. This according to Gasgoo, who analyzed new data released by the China Association of Automobile Manufactures (CAAM.)

At last count, China sported 52 brands, obscenely more than any other country on this planet. Some more may have been missed in the count. With 42 makes fighting for the crumbs that fall off the Big Ten’s tables, Mr. Cheng can be 99% sure of the consolidation he predicts, and his government desires.

Even China’s Big Ten feel the pain:
- A higher sales tax on big cars caused sales of big displacement luxury cars drop by more than 50 percent, Xinhua reported.

- FAW’s third quarter net profits are down 4 percent, says Reuters via Gasgoo.

- Ford is slashing output at Changan Ford Mazda, a ménage à trois between Ford, Japan's Mazda Motor Corp and Changan Automobile Co .

- China’s car export numbers are “discouraging” says Gasgoo.

Unfazed by groundless pessimism, China’s State Information Center still forecasts that the country’s auto output and sales will grow by 10%. In a (by Chinese standards) rare expression of “what have you guys been smoking” Gasgoo comments: “It is a phenomenon if China’s auto market can maintain a growth rate by 10% this year amid a global auto market downturn.”


Jennifer said...

Dear B, you are not update your blog these two days!?

Bertel Schmitt said...

Jennifer, dui bu qi, I was so busy writing for http://www.thetruthaboutcars.com - neglected my own blog! I'll try to make up for it!