Car Manufacturer Anxiety About China Grows as GM Falters

The largest U.S. car company announced:

General Motors and its joint ventures sold 291,371 vehicles in China last month, setting a new October record. Sales were up 3.2 percent on an annual basis, as domestic sales by GM’s Shanghai GM and SAIC-GM-Wuling manufacturing joint ventures reached new highs for the month.

GM’s long history in China, where it has operated since 1908, makes it a strong bellwether and proxy for activity in the world’s largest car market.

Many manufacturers’ auto and light truck sales have slowed, with the exception of luxury models. Middle-class Chinese could be nervous about a slowing economy. High and surging real estate prices may be taking an ever larger portion of their incomes. Wages paid by some employers have flatlined. And manufacturing work increasingly has shifted to countries such as Mexico, where wages continue to be extremely low.

Among the most difficult barriers to future car sales in the People’s Republic is the tremendous air pollution within the largest cities. The problem has become so acute that some cities have restricted the number of vehicles that can enter them on certain days. Already car sales have been curtailed in some of the largest urban areas. Most experts on air pollution say the trouble will worsen as burning coal fuel and old trucks with engines that cause harmful emissions will foul the air with greater frequency and at more dangerous levels.

China was supposed to rescue top car manufacturers as sales in Europe cratered and show only modest recovery. The United States has become a bright spot, but it cannot carry the global load of improving sales without China. And China suddenly has lost its luster.

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