According to the officious, English-language China Daily, “Chinese automakers are facing their toughest challenge in three years as demand is falling and profitability is plunging amid rising costs.” And that’s because “China’s car sales rose 11 percent in the first nine months, compared with a 22 percent increase for the whole of last year.” So, even before the U.S. of A. can open the federal bra on behalf of Detroit’s automakers, the Chinese government has swung into action. “China’s government is discussing policies to help automakers boost sales and fend off the global financial crisis.” Policies being considered in Beijing include… “Consumption-tax breaks” – The PRC plans to give the little guy a break and money in his hand, instead of giving billions to three (or maybe just two) big guys. “Subsidies to automakers that develop vehicles powered by alternative energies” – that has a familiar ring to it. Because alternative energies are still mostly a gleam in the eye of a few believers, the real plan consists a hefty tax break with a green top coat finish. Chinese consumption tax (nothing to do with TB) can be as low as one percent for a (non-)car with a displacement of less than a liter, and as high as 40 percent for a bigger-bore vehicle of more than four liters. China Daily’s source is Chen Jianguo, himself “deputy head of the industrial coordination department of the National Development and Reform Commission.” If China Daily quotes a guy with a title that long, you can consider the plan as good as done.
Category: China
Memo to Ford: recall your Taiwanese head honcho and put him in charge of Detroit’s pimp-machine. Jeffery Nemeth, Prez. Of Ford Taiwan, a.k.a. Lio Ho Motor Co., found an ingenious rationale for sagging sales: too many people are leaving the country. The Taipei Times reports that Nemetz is pissed that 1.3m Taiwanese have moved to mainland China; it’s getting worse, it’s bad for auto sales, and it’s gotta stop. His warnings come on the heels of the latest government statistics that counted a paltry 17,324 units being sold last month- – the crappiest October level in 20 years. If this trend continues, two million Taiwanese move to China next year, it could cost Taiwan 150k units, Nemetz predicted. Judging from October’s insipid new car sales rates, fleeing Taiwanese could wipe out the island’s entire car market. Of course, it’s pure coincidence that there are rumors of yet another prospective emigrant: Ford itself. Nemetz immediately denied that his company would forego Formosa. “Ford does not plan to leave or end our operations in Taiwan.” Likewise not true: industry-protective measures of Taiwan’s government might cancel all citizens’ passports to prevent an extenuation of the exodus. Dear DHS: Please, don’t get any ideas, ok?
Ever since it lost its new hotness, TTAC has been reporting that the Chinese car market has lost its new hotness. TTAC 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). Yesterday, 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 TTAC’s B&B. “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…
Things must be really, really, really bad if someone goes on strike in China. But striking cabbies striking policemen? Unheard of. Speaking of which: Ever heard of China’s largest municipality? It’s Chongqing, population 31,442,300 (as of 2005, Buddha knows how many today). Yesterday, in Chongqing, the doomsday scenario unfolded. Hundreds of perturbed taxi drivers took to the streets (on foot) and smashed vehicles to protest “shortages of fuel and high fines for traffic violations,” as the official Xinhua News Agency has it. The enraged cabbies gathered on a business street, destroyed 20 vehicles, including three police cars. Scab cab drivers who refused to join the protest were pulled out of their cars, along with the petrified passengers. A spokesman for the Chongqing police bureau confirmed the violence, and said the situation was now “under control.” 800 cab drivers returned to work by Monday afternoon. Downtown Chongqing has 9000 taxis. American car drivers: Don’t try this at home.
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.
Chinese mothers don’t admonish their one-and-only child to “eat up, there are children starving back in America.” But we’re getting there. Case in point: This weekend, another Rolls-Royce showroom opened in Shenzen, Gasgoo reports. It’s the seventh Rolls Royce retail location in China. Another one, located in China’s industrial center Ningbo, will open its doors in a few months. Rollers are on a roll in China. I counted two Phantoms alone in the underground garage of my Beijing building. At the Shenzen opening, Rolls presented their new Rolls-Royce Phantom Coupé to the Chinese public. It’s their entry model. “Nearly two-thirds of Coupé customers worldwide have not owned a Rolls-Royce before,” said Jenny Zheng, Rolls-Royce Motor Cars’ General Manager for Greater China. BMW are thanking their lucky stars…
VeeDub in Germany has just issued their numbers for the past nine months of 2008. Viewed through the prevailing “the world is coming to an end” perspective, VW’s financial results are financial pornography, performing better than the male lead in a Russ Meyer movie. We’re talking a 15 percent gain, a money shot of more than $6b pretax. From January to September 2008, VW moved 4.8m units and grabbed a 10.1 percent share of the world market, according to the usually reliable Automobilwoche [sub]. Despite of what’s happening elsewhere in the piston business, Volkswagen’s CFO Hans-Dieter Pötsch stands by his bullish guidance for 2008: the predicted numbers will come true. Elsewhere, China’s automakers have also released profit reports for the third quarter.
GM’s overseas operations have long been touted as the only part of the General that is worth actual money. But might it make sense for GM to sell of profitable foreign operations? Though it’s doubtful that GM would ever voluntarily spin off, say, Buick and sell it to a Chinese firm, Charles Child has a column in Automotive News [sub] suggesting lawmakers should consider making such an asset sale a condition to further bailout cash. Child suggests that a sale of Buick to Shanghai Automotive Industry Corp (SAIC) makes lots of sense, cutting the number of US brands, and putting cash in the General’s pocket. How much? Based on Jag/Land Rover’s recent price tag of $2.3b, Child guesses Buick could be worth a billion to SAIC. Sure, The JagRover sale happened before credit markets took a dirt nap, but hell, GM could even use thre-quarters of that much cash right now. Plus the US market needs the Buick brand like it needs another run on the banks. Child’s analysis is thorough and compelling, and his thesis is well summarized in the final two sentences of his piece.”In today’s crisis, creative solutions are imperative. Nowadays, nothing is sacred in Detroit.” Truer words were never spoken.
“Was uns nicht umbringt, macht uns härter.” Martin Winterkorn’s may not have quoted Freddy in his speech at the International Zulieferer Börse (IZB), related to us via Automobilwoche [sub]. But the CEO of Volkswagen’s theme was clear. “Don’t panic!” Winterkorn said (in German). VW will emerge from the crisis “stronger than ever.” Winterkorn pointed to growth markets such as China– which did little to calm suppliers’ fears (unless they were Chinese). “In China, 100 million people have a driver’s license,” VW’s capo di tutti capi said. Correct. “Only 10 million have a private car,” he added. Wrong. As a matter of fact, nobody really knows how many private cars there are in China. Gasgoo.com once had two numbers in the same article: “The total number of private cars in China jumps 32.5% to 15.22 million units by the end of 2007,” Gasgoo wrote. A paragraph later.. “35.34 million are private cars, an increase of 20.8% from one year earlier.” It’s easy to get confused in China. But if VW, China’s largest auto manufacturer doesn’t know the market’s size, who does? OK, now you can panic. [NB: the IZB is an ingenious cost-cutting measure of VW Purchasing whereby parts suppliers meet in Volkswagen’s Autostadt— and pay for the privilege.]
While TTAC has Tesla on a Death Watch, aspiring Chinese EV-automaker BYD is getting massive street cred in The People’s Republic. In case you’ve got something called a life, BYD stands for “Build Your Dreams.” Since late September, “BYD” also stands for “Buffet’s Yankee Dollars.” Omaha’s Oracle liked the company so much he wrote a check for $230m for a 9.89 percent stake. [NB: Buffet knows the tax consequences lurking in a CFC— and we’re not talking chlorofluorocarbons.] Based in Shenzen, BYD is one of the world’s largest manufacturers of rechargeable batteries for cell phones. According to The New York Times, “the company also has a fast-growing auto-making unit that accounts for nearly a third of its revenue and makes fuel-efficient compact and subcompact cars for the Chinese market.” They have some bitchin hybrid and plug-in cars in the works with specs that scare the BYDickens out of the competition– if they’re half true. OK, make the jump for today’s BYDispatches.
For the few past years, European and American automakers looked to Chinese carmakers with hope and trepidation. They hoped the booming Chinese market would lift their worldwide sales. It did. They feared the Chinese would export cars en masse, swamping Europe and the U.S. with cheap vehicles. They did not. For various reasons (crash tests, emissions, the economy), the arrival of the four-wheeled Yellow Peril was a non-starter. What little exports the Chinese managed went to second- or third-tier markets like Africa or South America. Even those are are going down, down, down. In August, China exported a mere 44,400 units, a decline of 22.18 percent month-on-month and 11.29 percent year-on-year. This according to numbers straight from the China Association of Automobile Manufacturers, quoted in Gasgoo, which calls the news “discouraging.”
The People’s Republic of China has decided to drop some serious money on digging the country out of a hole. We’re not talking namby-pamby bailout money for distressed banks and auto companies that may actually go up in price (yeah, sure.) We’re talking real hard asset investment. China’s State Council has approved $300b for large scale construction projects to seriously boost economic growth, China Daily reports. Everybody had been banking on concrete measures to expand China’s clogged roads. But to the abject horror of China’s motorists, the government’s money will be working on the railroad. “In 1997, we dealt with the Asian financial crisis by stimulating domestic economic growth by investing in the construction of highways.” Zheng Xinli, a senior government policy advisor, said. “This time the money will go on improving the rail network.” Using the CIA Factbook’s numbers, 1/10th of GDP will be railroaded through China’s economy. Somebody’s making out this BIG STYLE. Bulldog, bulldog; bow wow wow!
Last Thursday, the cargo ship CSCC Shanghai left Ventura County’s Port Hueneme with a load of near-extinct species bound for Shanghai, China: 2,100 GM big bore Buicks and Cadillacs. A lot of cargo space was also taken-up by gas-gulping Cadillac Escalades. China’s importing the American behemoths like they are going out of style (which, of course, they are). According to China’s General Administration of Customs, SUV imports from January to August surged a whopping 75 percent year-on-year, to 147k units. In fact, SUVs amount for half of the total imported vehicles. (Imported sedans only increased 17 percent.) Even higher gasoline prices and punitive taxes slapped on big displacement vehicles could not suppress China’s appetite for cubic inches. As far as GM’s concerned, China won’t go hungry. GM logistics specialist Don Asdell told the Associated Press that he’s looking at one or two boatloads a month for the Chinese market. Needless to say, there’s more (says so right there).
Read More >
“Brakes come off auto sales” the semi-official, English-writing Chinese newspaper China Daily headlines today. “Beijing car sales, which account for about a tenth of the national tally, are surging this month after the end of Olympic traffic controls and because of rumors about new caps on vehicle numbers, ” reports the newspaper, citing the head of China’s largest car dealer. Beijing Asian Games Village Automobile Exchange, an 80k unit megadealer in China’s capital, has seen sales increases of 30 percent this month, and there’s still another week to go. Beijing’s buyers are stampeding back to the showrooms, after half of the cars had been banned from Beijing’s streets during the Olympics. Following the Olympics, a Kafkaesque car ban on Beijing’s byways and highways was instated, driving demand for second cars. Or for two cars at a time. Rumors that Beijing’s city government could limit new vehicle registrations to 100k a year, about a third of the city’s average annual vehicle sales, also unleashed a storming of the showrooms. “We don’t know how the rumor started or whether it’s true, but it’s certainly working in terms of boosting sales,” said Su Hui, General Manager of the megadealer.
Read More >
There are a lot of confusing numbers coming out of China. They get spun a thousand different ways. In the Pictures-Speak-Louder-Than-Words Dept., here is the January-September hit parade of sedans that sell in China. And to give you the current snapshot, right underneath are September only sales. Data are straight from the China Passenger Car Association (CPCA,) and they are as good as they get in China. Excel chart courtesy of our our friends at gasgoo.com The clunkers, the FAW-VW Jetta, and the SVW Santana just won’t die. They are ugly. There is no marketing support behind them. And they just keep on outselling everything. With the Excelle, GM still is well positioned, whatever detractors may say. The September numbers say GM still can fight the fight.
Recent Comments