Foreign automakers double down on China bets despite slowing growth

Mon Apr 20, 2015 12:38am EDT
 
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By Jake Spring

SHANGHAI (Reuters) - Foreign automakers continue to plough money into factories in China, the world's largest car market, even as the biggest economic slowdown in a quarter of a century crimps sales growth.

Market leaders Volkswagen AG (VOWG_p.DE: Quote) and General Motors (GM.N: Quote) show no sign of letting up on their planned investments, while Toyota Motor (7203.T: Quote) and Ford Motor (F.N: Quote) are also pursuing new China expansion plans.

That's in spite of the economic slowdown further depressing the car market in January-March, when sales grew only 3.9 percent, compared to 9.2 percent a year ago and way below the 7 percent growth that the China Association of Automobile Manufacturers (CAAM) predicts for this year.

"It's still one of the markets with the highest growth in the world so we're not disappointed in this," Carlos Ghosn, CEO of both Nissan Motor (7201.T: Quote) and Renault (RENA.PA: Quote), said at the Shanghai autoshow on Monday. "We are investing in China and we are going to continue investing in China."

Foreign automakers, many of which will unveil new products for China at this week's Shanghai show, including Ford's redesigned Taurus sedan, aren't fretting over the first quarter slowdown. But if the fallout from the broader economic slowdown bleeds into the rest of the year, global automakers may need to reconsider their China expansion plans, said James Chao, Asia chief of IHS Automotive.

A handful of foreign automakers are still outperforming the market, with Ford, for example, posting 9 percent sales growth in the first quarter.

"We're very conscious that part of what we do is we match demand with supply. We deal with reality, and if the reality tells us to slow down production, we'll slow down production," Ford's executive chairman Bill Ford told Reuters on Monday, noting that growth in China was still "quite robust".

IHS's Chao added the market was still divided into two segments, with domestic manufacturers hovering around 60 percent capacity and the international joint ventures at 80-85 percent.   Continued...

 
Employees work at the third factory of Dongfeng Peugeot Citroen Automobile company, after its inauguration ceremony, in Wuhan, in this July 2, 2013 file photo.  REUTERS/China Daily/Files