Automotive executives running carmaking joint ventures in China must be asking themselves regarding the current performance situation: is it a downturn in the lower end of the car market or backlash against trade war?
The Financial Times reported Ford’s plants in China operated at only 11 percent of capacity during the first six months of this year, as the firm’s car sales plunged to 27 percent of the same period last year.
Meanwhile, Peugeot owners PSA’s plant in Chang’an produced just 102 cars — yes, you read that right, 102 cars — in the first half of the year, meaning its capacity utilization was below 1 percent. The firm’s other joint venture with Dongfeng Auto ran at just 22 percent of capacity, the article reported, as sales were just 62 percent of the same H1 period last year.
The collapse in sales comes particularly hard as foreign firms have been making such stellar returns from the China market.
Volkswagen and General Motors’ Chinese sales accounted for 38 percent and 23 percent of the companies’ respective pre-tax profits last year, so losses will be particularly painful. Related: Major Setback For EVs Could Delay Peak Oil Demand
Both firms have fared better than Ford and OSA, though. Volkswagen reported a 6 percent year-on-year sales decline in the first quarter of the year, while sales for GM fell 10 percent. Capacity utilization has so far held up well, staying above the critical 80 percent (the generally accepted break-even line). The Financial Times reported the Shanghai GM joint venture is running at 88 percent capacity, but Volkswagen’s venture with FAW Group achieved only 77 percent in the first half of this year.