JV enterprises take steps to deal with decreasing growth rates in the Chinese passenger automobile market

With growth rates in the Chinese automotive market, many joint venture enterprises have rolled back their sales targets for this year. According to statistics from the China Association of Automobile Manufacturers, a total of 1.67 million passenger automobiles were sold in the country during the month of April, representing year-on-year growth of only 3.7%. That poor performance is looking to continue into May, with dealer inventories continuing to stay at warning levels.

Ford’s President of the Asia-Pacific Region David Schoch announced that the company’s Chinese subsidiary had to tackle the issue by decreasing production capacity over the first quarter of the year. Mr. Schoch emphasized that the way to combat these problems was not by engaging in pricing competition, but instead by balancing supply with demand to properly appropriately ensure that inventory levels remain stable.

At the same time, Brilliance BMW and Jaguar Land Rover both reduced their sales forecasts for the second quarter of the year, with the latter decreasing its quarterly sales expectations by 10% to 20% in a bid to alleviate pressure on its inventories.

Shanghai VW, Changan Ford, FAW-VW, Dongfeng Peugeot Citroën and Beijing Hyundai are among the many automotive joint venture enterprises that are holding promotional activities and slashing prices in order to lower their inventories.

Analysts point out that slowing growth rates are becoming the norm for the Chinese automotive market, urging automotive enterprises to take the appropriate actions.