Us-China trade war hurts the Detroit and Dearborn

9 July 2019

GM and Ford in the second quarter again fell on the Chinese car market

Concerns General Motors and Ford Motor Co. announced a decline in sales in the Chinese market in the second quarter, although the decline went more moderate pace. The American automakers continue to suffer from the slowing economy because of the American-Chinese trade war.

Sales of GM vehicles in China in April-June fell by 12% compared to the same period last year, while sales of Ford, respectively, fell by 22%. While GM has suffered from increased competition in key crossover segment of medium price that Ford suffered from a lack of supply of new and upgraded models.

Recall that in the first quarter, Ford sales in China fell 36%, and GM at 18%.

However, depressing the sales figures of GM, the second largest global automaker in China and Ford foreshadow even more uncertainty for an industry that is trying to break the downtrend that brought her last year to the first annual sales decline for the first time in nearly three decades.

Total, in January-June of this year, GM sold in China of 1.57 million vehicles, and Ford – 290,3 thousand

In June, manufacturing activity in China contracted more than expected, which further reinforces the need for economic incentives for the automotive industry on the background of increasing import tariffs in the US and weakening domestic demand.

Annual car sales in China fell last year for the first time since the early 1990-ies, and it is expected that they will continue to fall this year. According to the China Association of automobile manufacturers (CAAM), sales in may fell 16% compared to the same month of the previous year, which was the 11th consecutive month sales decline and followed a fall of 15% in April and -5.2% in March.

According to CAAM, the proportion of American car companies in the total sales volume of passenger cars in China in the first five months of this year fell from 11% to 9.6% per annum. During the same period, the share of German brands rose from 21% to 23%, and Japanese automakers, respectively, from 17% to 21%.

CAAM is going to declare the results of the June sales next week and the forecasts of industry analysts, they will be negative.

New models
In China, GM operates a joint venture with SAIC Motor Corp., which produces cars of the brands Buick, Chevrolet and Cadillac. In addition, it has other joint ventures with SAIC and Guangxi Automobile Group, which produce low-cost minivans, and mastered more prestigious model.

Sales budget (almost folk – ed.) brand GM Baojun has fallen by 32% over the last quarter. While sales of the premium of the Cadillac brand jumped 37%.

In 2018, GM sold in China 3.64 million cars, compared with of 4.04 million in 2017.

Ford produces cars in China in a joint venture with Chongqing Changan Automobile Co. and Jiangling Motors Corp. The company also announced the intention to issue together with the firm Zotye Automobile Co. the low-end cars.

The automaker from Dearborn (Michigan), is struggling to restore sales in China, which became the second largest market in the world after his business went on the decline here in the end of 2017. So, in 2018, sales of Ford in China fell by 37%, after falling 6% in 2017.

To attract customers GM, Ford, and competitors launch in China a new model or update the old one. So, GM has planned to introduce this year about 20 new products or restyled variants of the former.

GM spokesman told Reuters: "About two-thirds of the approximately 20 new and updated models will arrive in the second half with a special focus on premium models, medium and large SUVs," adding that more than half of the new Prime Minister will have a completely new model.

In turn, Ford said it plans to localize its luxury Lincoln brand in China and will launch on the local market more than 30 new models over the next three years, of which over a third will be in electric vehicles.

The company has already launched in China new items such as Focus and Territory..