Foreign auto joint-ventures decline in China, while domestic automakers surge

With slowing down growth pace of Chinese macro economy, an array of big foreign automakers announced sales slump in the country in the first half of the year. Toyota and BMW have proposed early warning towards the increasingly adverse situation in Chinese auto market.

Chinese vehicle production quantity and sales in July have dropped respectively 11.8 percent and 7.1 percent compared with the same period of last year. In particular, passenger vehicle production volume and sales in China in July have slid by 11.6 percent and 6.6 percent compared with those of a year earlier, according to the statistics of China Association of Automobile Manufacturers.

Explanations can be found in three aspects. With the rapid surging of auto industry, demand for vehicles in Chinese market has shrunk, and the vehicle purchase restriction regulations from Chines government covered a vast urban regions. The increasingly stronger Chines domestic automakers, including Changan, Great Wall, Geely and GAC, have grab a big part of market share, especially in the passenger vehicle market segment.

While foreign joint-ventures report sales slide or dull sales in China, Chinese domestic automakers witness 5.1 percent sales growth to 499,000 units in terms of passenger vehicles in July compared with the same period of last year. Specifically speaking, Chinese domestic brands passenger vehicles accounted for nearly 40 percent of the market, a 4.3 percent increase on a year-on-year basis.

The long existing cheap and low-end image has been removed from Chinese domestic automakers, who have won the trust of Chinese consumers. On the other hand, many foreign automakers randomly cut configurations on some models, doing harm to their brand image.

Additionally, Chinese domestic automakers have gained a large sum of supporting subsidy from government in the alternative fueled vehicle market, while the foreign joint-ventures haven’t caught the new surging wave in the alternative fueled vehicles.