Though many may not realize the extent of it, the auto business has been booming in China for a while now. General Motors actually sells more vehicles there than they do in the States, and huge market growth in China has been crucial to the bottom lines of all the carmakers that do business there. But according to Fortune, these boon times may be coming to an end.

LMC Automotive predicts that the 2012 vehicle market in China will only be growing at a 9.2-percent rate, less than half of last year's rate, according to the report. Perhaps more chilling is that the Chinese government wants to keep foreign automakers from expanding, in an effort to shield it's own domestic industry. While GM and Ford are already established in China, Chrysler – which does not build cars in the country yet – might be shut out given the new policies, Fortune says.

Then there's the possibility of an economic crisis in China, fueled by a combination of rapid middle class income growth and the expansion of state-owned companies, which some analysts say could happen in just three years. No matter how you look at it, the gold rush in China is likely coming to its inevitable end.


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 45 Comments
      Ocellaris
      • 2 Years Ago
      "Perhaps more chilling is that the Chinese government wants to keep foreign automakers from expanding, in an effort to shield it's own domestic industry." Translation: Ok thanks for bringing over plenty of cars for us to copy and paste. We have enough designs to keep us busy for a while now. Please remain calm while we slowly and surely break down the businesses you have established on Chinese soils.
        fat
        • 2 Years Ago
        @Ocellaris
        China for the Chinese people! Foreigners get the f out!
        RocketRed
        • 2 Years Ago
        @Ocellaris
        China can use google images to copy and paste. It doesn't need imports. Anyway, China's auto industry is already massively over-populated with brands and capacity. This over capacity is going to have major effects for upstream steel producers and other suppliers. They can't export the stuff they make now, so that is not a solution. China's auto industry is going to have a massive "correction," whether before or after the commercial real estate bubble pops. So the goverment needs to glide it down properly, as they transition other sectors to a more normal growth pattern. As far as what is chilling, if Chrysler wants to build cars in China, it can do what GM, Ford, VW, and others have done, according to Chinese law. Join a JV with a Chinese partner. If China is now blocking new JVs because the industry is too big, that is a story about snoozing and losing.
      Kai F. Lahmann
      • 2 Years Ago
      The Chinese market comes now to a new level: The demand on cars will grow slower than the production. This will result in (even) more people looking about *what* they buy. And with quality and maybe even efficiency becoming relevant the native Chinese car makers will have a *real* problem. And their second problem is an upcoming second-hand market. I won't be surprised, if we'll see most of these native Chinese car makers disappearing over the next years.
      mark and connie
      • 2 Years Ago
      China, the main reason GM kept Buick over Pontiac. If (when) China nationalizes, GM and their management will once again be the fool.
      Teleny411
      • 2 Years Ago
      When Chinese companies are up to snuff they will virtually close their borders to imports.
        jvice
        • 2 Years Ago
        @Teleny411
        as in, they will keep them in long enough to be able to create an exact copy
      dohc73
      • 2 Years Ago
      Been saying all along. America's debt-hole took a half a century to dig; China will do it in less than a decade.
      RGT881
      • 2 Years Ago
      China has been serving as an economy on which rest of the world, regardless of the industry, has been dependent upon. Now its economy is beginning to cool off, there are some issues which Chinese government must address, specifically debt accumulated at municipal levels, bubble developed in real estate along the coastal areas, the Yuan is still largely undervalued its eroding purchasing power of the population, and lastly the taxes are still too high. China is a growing country and just like UK in 19th century, and US in 20th, it will have its challenges, but ultimately they'll be the dominant force because they have the savings of general population and an outstanding manufacturing base. As for automotive industry prospects, it is impossible to maintain such a rate of expansion.
        rlog100
        • 2 Years Ago
        @RGT881
        Sorry to disappoint, you have that upsidedown. By using protectionism, currency fixing and dropping a lot of coin in Washington (with some Wallstreet help there) China has been a parasite on the US and other Western Economies to the point where those economies are now sick. China is now trying to transition away from its Parasite role. More likely we're both going down.
          RGT881
          • 2 Years Ago
          @rlog100
          What do you read? Huffington Post? Protectionism was used only towards the Western world because as was shown in 90s, West wants others to open up by playing only by the rules that West sets forth. China looked after its own interests. Meanwhile West went on a borrowing and consumption spree. On a public and private level. As for the currency argument, I've heard it before and I don't buy it. Currency fixing and debasement has never worked for any country. If it had then Zimbabwe would have been the leader in exports! China is a production country, it's productive, it's efficient and lax regulation standards make it easier move labor intensive jobs there. So to use currency fixing as a bullet-point is ignorant. Moreover, Chinese exports count for roughly 5% of its GDP. Chinese may have trade surplus against US, but they have trade deficits with other countries in ASEAN region.
          rlog100
          • 2 Years Ago
          @rlog100
          @RGT The trade deficit and the GDP are masked by its lending practices. Instead of selling you the rope to hang us with, you've sold us the rope to hang ourselves with. Using that deficit money we've band-aided the negative impact of China's parasite behaviors allowing the situation to fester. If the bandaiding our situation with flooding our economy with borrowed money and China's protectism wasn't in place, things would have moved through to a safer but slower approach to an equiibrium. Something that could have lasted. Instead the parasite has killed the host and there's no new host to jump to.
      That Kid
      • 2 Years Ago
      When your economy depends on exporting massive amounts of cheaply-made goods to a country on an unsustainable economic trajectory and reverse-engineering products by the same foreign companies seeking to take advantage of your cheap labor, then you are bound to hit a wall sooner rather than later. Though the difference is China actually has an industrial policy that encourages the development of their industries and they spend bundles on modernizing their infrastructure. That puts them in a somewhat better position to adapt than we are in, I am inclined to think.
      Scr
      • 2 Years Ago
      China is riding a huge bubble, and it is slowly starting to burst. The housing bubble is collapsing there as we speak. Autos will be next, then manufacturing as the things that made China a good place to do business will cease to be. Many companies are looking to still sell there, but pull out manufacturing to other low-cost countries, or even return to the US after the corporate tax rate is reduced from being the highest of any industrialized country on earth. The lower the rate, the better for jobs and your retirement portfolio.
        ZM
        • 2 Years Ago
        @Scr
        It's been in the news for a few years now, businesses are starting to pull out of China and move to other Asian tigers because it's too expensive to manufacturer in China as opposed to other developing countries.
      lrx301
      • 2 Years Ago
      "China is nearing economic collapse" How many time have we heard about this?
      buckfeverjohnson
      • 2 Years Ago
      Digging on the Holden Caprice based Park Avenues.
      fat
      • 2 Years Ago
      Geely by now has superior technologies than GM and Ford, ranging everything from turbo to plug-in hybrid to 8 speed automatic to the world's most advanced safety technologies, and itself has a number of brands.
        MyerShift
        • 2 Years Ago
        @fat
        Useless and unintelligent!
        ShutoSteve
        • 2 Years Ago
        @fat
        Do you listen to yourself speak? Do you read what you type? It's always useless crap that is either false or makes no sense whatsoever. While China is a booming economy, my girlfriend, whom is from Foshan herself, would be glad to tell you and your tub of ice cream that people in China laugh at Geely, Chery, etc. People there prefer luxury, safety, and reliability, as well as gadgets. All of which the mainstream Chinese automakers still haven't caught onto, because they're too busy copying everyone else, albeit unreliably. Take your crap elsewhere fatty. Nobody wants it here.
      Hazdaz
      • 2 Years Ago
      What a ridiculously sensationalized headline and article. "vehicle market in China will only be growing at a 9.2-percent rate" ONLY 9.2%? Are you kidding me? Other countries would kill to have that kind growth - even more so knowing that its not some 1 year fluke, and rather it comes after years and years of huge double-digit growth. But the bigger issue is: Are people really stupid enough to think that everything lasts forever? There is no way any market - even the largest market on the planet - could keep chugging along at near 20% growth EVERY year. But just because something has slowed down, doesn't mean that its going to stop any time soon. This BS reminds me when come company bitches and moans that their earnings are "only" 4 or 5% higher in this down economy? They cry poverty, but they are still making money, they just aren't making the 10 or 20% earning gains that they had done previously.
        • 2 Years Ago
        @Hazdaz
        [blocked]
        ZM
        • 2 Years Ago
        @Hazdaz
        You're missing the problem, a decline in growth means a decline in investments, even if growth is in the positive. A decline in growth is the definition of a closing bubble. It deters investment because it's difficult to predict how much growth will slow. The question quickly becomes, if it's 9.2% this year what's the expected decrease for next year and do I invest? Massive market fluctuations create instability and uncertainty. An investor may want to push into more stable investments or markets rather than risk a serious decline or worse, a collapse.
          sirjaysmith
          • 2 Years Ago
          @ZM
          So the point is speculators are our worst enemy. Got it.
        Renaurd
        • 2 Years Ago
        @Hazdaz
        I must agree.
    • Load More Comments