Low Exposure in China Makes Chrysler a Winner

After several years of remarkable growth, the Chinese auto market passed the United States in 2010. At that point it was presumed that sales in China would easily pass 20 million a year, while U.S. sales languished at about 12 million. The opposite has happened. Car sales in the United States will be between 15 million and 16 million. The Wall Street Journal recently reported:

China passenger-vehicle sales fell for a second consecutive month in July, registering a 6.6% year-to-year decline. Sales of foreign branded cars fell 1.5% in the first half from a year earlier, compared with a 4.8% year-to-year rise in the overall Chinese car market—a disappointing growth figure compared with booming double-digit percentage growth in prior years.

Over the past year, Fiat Chrysler’s shares are up 39%, even with the recently market sell-off. GM’s are off 21% and Ford’s 25%. So far this year, the figures are no more encouraging for the two largest U.S. manufacturers.

GM was one of the western car companies to get into China early, along with Volkswagen. Ford is well behind the two leaders in market share, but last year it said it would open four factories in the People’s Republic to play catch up with other manufacturers, which also include Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC).

This year, Chrysler will be fortunate to be well behind in China, and it will have to rely very little on its success to post strong worldwide earnings. The company may sell fewer than 250,000 cars there in 2015.

Chrysler’s mistake of being late to the Chinese market and its focus on the United States, where it has consistently gained market share, have not allowed it to pass GM and Ford in America, but they have saved it from the crumbling of the largest car market in the world.

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