{"id":10751,"date":"2015-08-05T06:37:25","date_gmt":"2015-08-05T11:37:25","guid":{"rendered":"http:\/\/olduvai.ca\/?p=10751"},"modified":"2015-08-05T06:37:25","modified_gmt":"2015-08-05T11:37:25","slug":"the-unnerving-thing-global-automakers-just-said-about-chinas-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=10751","title":{"rendered":"The Unnerving Thing Global Automakers Just Said About China\u2019s Economy"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2015\/08\/05\/unnerving-thing-global-automakers-said-about-chinas-economy\/\" target=\"_blank\">The Unnerving Thing Global Automakers Just Said About China\u2019s Economy<\/a><\/h3>\n<p>Global automakers, still intoxicated with their own optimism after years of white-hot growth that transformed China\u2019s auto market from a backwater to the largest market in the world, have an increasingly chilling message.<\/p>\n<p>The auto industry is a huge force in driving economic growth in China. Most vehicles sold in China are manufactured in China. The component industry has been booming. The distribution and dealer network has been growing in leaps and bounds. Every new plant and dealership means more construction, more equipment, more jobs. Then there\u2019s finance and insurance and all the other elements that make up the car business. But now there\u2019s a slowdown.<\/p>\n<p>Today it was BMW. China has been BMW\u2019s largest, most promising, nirvana-like market. Not that BMW\u2019s results for Q2 were that bad. The euro\u2019s swoon produced a year-over-year sales gain of 20%. Yet, due to soaring costs, despite the weak euro, net profit fell 1.1%.<\/p>\n<p>The problem: China\u2019s market is \u201cnormalizing\u201d and \u201cbecoming increasingly competitive,\u201d BMW said in a\u00a0<a href=\"http:\/\/www.bmwgroup.com\/e\/0_0_www_bmwgroup_com\/investor_relations\/corporate_news\/news\/2015\/news_q2_2015.html\" target=\"_blank\"><u>statement<\/u><\/a>. \u201cIn the medium and long term, we remain utterly convinced of China\u2019s potential for growth,\u201d it said. But it\u00a0<a href=\"http:\/\/www.marketwatch.com\/story\/bmw-profit-falls-on-weakness-in-china-costs-2015-08-04\" target=\"_blank\"><u>warned<\/u><\/a>, \u201cIf conditions on the Chinese market become more challenging, we cannot rule out a possible effect on the BMW group\u2019s outlook.\u201d<\/p>\n<p>China\u2019s contribution to BMWs operating profit dropped 23% in Q2, echoing Volkswagen\u2019s report last week. BMW has cut production in China by 16,000 vehicles this year, CFO Friedrich Eichiner\u00a0<a href=\"http:\/\/www.bloomberg.com\/news\/articles\/2015-08-04\/bmw-second-quarter-profit-meets-expectations-on-europe-demand\" target=\"_blank\"><u>explained<\/u><\/a>. He blamed the stock market. As it crashed, it kept customers from making large purchases; others demanded hefty discounts.<\/p>\n<p>\u201cNormalization\u201d means the Chinese market is in the transition from Nirvana to a rough-and-tumble saturated market where brands have to fight each other for market share to get any sales increases. But no problem: \u201cIn the medium and long term, however, we remain utterly convinced of its potential for growth\u2026\u201d he said.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Unnerving Thing Global Automakers Just Said About China\u2019s Economy Global automakers, still intoxicated with their own optimism after years of white-hot growth that transformed China\u2019s auto market from a backwater to the largest market in the world, have an increasingly chilling message. The auto industry is a huge force in driving economic growth in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7862,7860,130,7861,7859,2353,4254,6118],"class_list":["post-10751","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bmw","tag-car-sales","tag-china","tag-chinese-economy","tag-global-automakers","tag-hard-landing","tag-wolf-richter","tag-wolf-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10751","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10751"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10751\/revisions"}],"predecessor-version":[{"id":10752,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/10751\/revisions\/10752"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}