Are Chinese Exports Shipping Out to Take Over the Auto Industry?
The U.S. auto industry has certainly seen rough times recently. While the Big 3–GM, Chrysler, and Ford–try to recover from the Automotive Industry Crisis of 2008-2010, China’s ambition to dominate emerging car markets is a threat to the future health of American auto manufacturers.
China’s booming economy has made the world familiar with the words “made in China.” Yet one industry Chinese exports have not been able to dominate is the automotive industry according to an article from The National Conversation.
According to the article, with “a modest 31 per cent share of sales” in their own country, Chinese auto manufacturers are turning their focus to emerging markets.
Even so, China has not yet become the new world juggernaut of automobile exports.
The National Conversation article goes on to report, “Last year, China exported 544,900 cars, a figure dwarfed by the 813,600 that were imported. Moreover, the cars imported tended [to] be of higher value than those exported.”
Just as China has seen explosive economic growth with manufacturing and exporting in other industries, China’s automotive market share around the world is likely to grow in leaps and bounds over the next few years.
The Globe and Mail blogged an article saying that China’s production of cars this last year was much higher than they were able to sell domestically and China prepares to export the surplus in 2012 without stopping production.
The Globe and Mail article goes on to report that “China had a 6 million units’ worth of unutilized capacity in 2011” and “is set to build two-thirds of the world’s new capacity in the next five years.”
That’s a lot of cars with which China will hit the markets.
While China’s cars shouldn’t be highly competitive in established markets yet (“yet” being the key word), China is likely to be able to make a big impact in emerging markets where low-cost cars will be very welcome.
And it probably won’t be very many years before China’s automotive exports will be able to compete in more established markets.
Perhaps the salvation for U.S. automotive companies is Indonesia. A Bloomburg Businessweek article details the huge growth expected in the Indonesian auto market and how GM is working to get a share of that. Of course, to be successful there, the American auto manufacturer will have its work cut out for it in a market dominated by the Japanese auto giant Toyota.
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