Business / Auto Global

Slump fails in China to deter global automakers

(Agencies) Updated: 2015-09-14 09:37

Auto sales in China are slowing and may fall for the first time in more than a decade, undercutting one of the few growth markets for carmakers like General Motors and Ford Motor, according to consulting firm AlixPartners.

The US automakers expanded last year to capitalize on long-term growth and are now wrestling with a softer market, AlixPartners said in a study released on Wednesday.

Carmakers won't get much relief in China until sales rebound because, even if the market grows this year, prices are under pressure, according to the study.

China has gone from being the auto industry's gold rush to being just like any other market, with slowing growth, pricing battles and some newfound ups and downs. Carmakers will have to realize that rampant expansion is gone, said John Hoffecker, head of the firm's global automotive practice. "The growth rates are slowing down," he said. "The question is, what will happen to pricing and profits? China is a stronghold for GM and many others."

Ford didn't immediately respond to calls about seeking a response to the AlixPartners study. Ford boosted its car-making ability by about 30 percent in 2014, as GM's increased 20 percent, according to the firm.

In July, GM said it would invest $5 billion in new models for emerging markets, including China. Even with the current malaise, GM expects emerging markets to account for 55 percent of its sales growth through 2030.

China will generate 33 percent and mature markets will provide 12 percent of additional sales, the company's president Dan Ammann said.

GM has managed to keep profits in China by pushing sport utility vehicles and luxury cars from Cadillac.

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