China is absolutely critical to U.S. car manufacturers. It is the largest car market in the world, as it moved ahead of the American market in 2009. Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM), in particular, are up against the overall drop in the market in the People’s Republic. In addition, their portion of the market is shrinking.
The China Association of Automobile Manufacturers released data on automobile sales in China yesterday and said:
In September, the decrease rate of sales narrowed on yearly basis. This month, the production and sales of automobiles in China reached 2,209,000 and 2,271,000 units respectively, up 11% and 16% than that of last month, but down 6.2% and 5.2% year on year. The year-on-year decrease rate for production enlarged 5.7 percentage points than that of last month; but shrank 1.7 percentage points for sales.
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Production and sales year to date were barely above 18 million.
GM’s sales in the third quarter dropped 17.5% to 689,531 vehicles.
Ford’s numbers in China were worse. Third-quarter sales were down 30.3% to 31,060, a number that is staggering. The company commented, “Ford China remains focused on its business transformation following the launch of the ‘Ford China 2.0’ strategy.” That Ford’s sales can improve in China is a long shot.
The U.S. market has started to stall, with sales of barely 17 million. If U.S. car companies cannot reverse their problems in China, their global problems become more extreme by the year.
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