Volkswagen AG, General Motors Company (GM), Toyota Motor Corp (ADR) (TM), Ford Motor Company (F) Each Gearing Up To Get a Bite of The Chinese Pie, Despite Slowdown In The Economy
Global automakers are not cooling their appetite for a larger stake of the Chinese auto market. Economic slowdown in China is not preventing multinational automakers from investing huge amounts of money in the market, but analysts say that a time might come when some players have to cool their investments in China.
From Volkswagen to General Motors Company (NYSE:GM), there is no let up on planned investments in China. Also keeping their Chinese aspirations alive are Ford Motor Company (NYSE:F) and Toyota Motor Corp (ADR) (NYSE:TM), which are aggressively pursuing expansion in the market.
Toyota is investing $440 million to improve capacity in China, although the company saw its first quarter sales down 0.1%. Volkswagen is spending $23.3 billion in fresh investment in China, to take its yearly production to 5 million vehicles by 2019, from the current 3.5 million vehicles. General Motors Company (NYSE:GM) is targeting annual production of 5 million units in China. All the automakers hope that their capacity expansion efforts will go all the way into boosting their sales in the market.
Slow First Quarter Growth
The appetite for the Chinese auto market remains high, despite the recent slump in car sales in the market. In the January-March quarter, auto sales in China grew by just 3.9%, slower than 9.2% growth a year earlier. Additionally, the growth was slower than industry prediction.
According to Carlos Ghosn, the CEO of both Renault and Nissan Motor Co. Ltd (ADR) (OTCMKTS:NSANY), at the Shanghai Auto Show, China remains the fastest growing auto market in the world. For that reason, Ghosn said, they have no intention of pulling their investment in China, but will continue to invest more in the market.
Time to rethink China investment
As much as automakers are exuding confidence about the growth of the Chinese market, analysts say that the time might come when all or some of them will have to reconsider their Chinese expansion.
Ford is particularly using a cautious approach in China, producing cars according to demand. Despite the slow growth in the first quarter, the company posted a 9% uptick in sales in the quarter.
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