WSJ: China Won’t Save U.S. Automakers. Duh!

(First published by Bertel Schmitt in TheTruthAboutCars on November 5, 2008)

Ever since it lost its new hotness, this blog has been reporting that the Chinese car market has lost its new hotness. This blog also gave its readers a heads-up that China won’t save U.S. carmakers’ butts, as the Middle Kingdom had done in the past, when skyrocketing sales in China buttressed anorexic auto sales elsewhere on the planet (i.e. North America). That bit of news finally reached The Wall Street Journal [sub]. “China’s Car Market Loses Luster for Foreign Firms,” alliterates the WSJ, surprising everybody except this blog's readers. “Growth in China’s once-roaring auto market has slowed to a near-crawl, casting doubt on the country’s status as industry savior,” writes Patricia Jiayi Ho. Previously, Patricia penned articles titled “Ex-Tuskeege Airman Moore dies at age 82,” or “Badminton club to open in Arcadia,” so she’s clearly qualified to report on expiring markets, and the back-and-forth of the world economy. Patricia’s prose continues: “Foreign giants like General Motors and Ford Motor Co. have increasingly been looking to emerging markets like China and India to provide a much needed fillip to declining sales at home.” And look they did…

GM actually looked quite good for a while in China and had Volkswagen rattle in their jackboots in years’ past. Then, GM dropped the ball. Ford is a nobody in China. Ford’s feeble 240,879 units made in the first nine months don’t even rate a place amongst China’s top ten automakers. Officially, Ford doesn’t count at all in China, they hold only minority shares in two joint ventures. The WSJ wisely refrains from mentioning Chrysler. Chrysler was actually the first foreign carmaker in China. Kindof.

In 1983, then American Motors signed a deal with Beijing Automotive Works to replace its smoke belching Russian GAZ Jeeps with cheap Cherokees, a deal that makes some old-school Chinese still yearn for the Russian model. Chrysler let its first mover advantage fall fallow. “Its overall performance during the past two decades might politely be described as disappointing,” wrote Business Week, a year ago. Chrysler blames it on the Germans.Anyway, the Chinese car market is still growing.

Depending on who you ask or believe, growth is anywhere between 5 and 10 percent this year. Which sets China apart from waning Western Europe and especially from the atrophy formerly known as America. In GM’s Monday conference call, Mike DiGiovanni, GM’s chief sales analyst looked at the October figures, gulped, and said: “If you adjust for population growth, it’s the worst sales month in the post World War II era.” And then, in a rare case of clairvoyance, he muttered: “Clearly, we’re in a dire situation.” Message from China: “Sorry, can’t help ya! “

(Photo courtesy Otaku. Thank you!)

Going down? VeeDub China VP Gets Worried

(First published by Bertel Schmitt in TheTruthAboutCars on November 3, 2008)

How about this for tell me how you really feel: Volkswagen AG, China’s biggest car maker, told Bloomberg (of all people) that “the worst may yet to come” for China’s car market. This cheerful prediction was uttered by Soh Weiming, Volkswagen Group China’s Executive Vice President. Soh Weiming is no stranger to an uncertain future. The imminent ouster of the cigar-loving VP had been floated for years in Beijing and Wolfsburg. But like the Energizer Bunny, he keeps on going and going. And there he was to say that it would be “too early to estimate” the losses caused by the economic slowdown in China’s auto industry.

After a surge of 23 percent in the first two quarters of 2008, Volkswagen’s sales in China dropped 4.2 percent in the third quarter. SAIC, Volkswagen’s joint venture partner in China’s reported a 78 percent plunge in third-quarter profits. The company, which is also in bed with GM, said their vehicles sales growth was only nine percent in the first nine months. Last year, SAIC’s sales had ascended 24 percent. FAW, Volkswagen other joint venture partner, fared better; they reported a 62.39 percent rise in net profits for the first nine months. Soh Weiming made no predictions regarding Volkswagen’s sales in China. Which prompted Bloomberg to point to a government estimate that says that Volkswagen China sits on a pile of 170k unsold cars. Now we understand Soh Weiming’s feelings.

(Photo courtesy thestandard.com.hk. Thank you!)