China sales for the quarter ended June 30, 2019, of General Motors Co. (GM) and Ford Motor Co. (Ford) have taken a hit, as per their announcement, in the midst of the growing United States-China trade wars.
The U.S car manufacturers took drops of more than 10%, with China’s Ford purchases dropping by 21.7%, and GM’s slumping by 12.2%. As compared to the first quarter numbers, where Ford and GM sales tumbled by 35.8% and 17.5%, the second quarter numbers are less sharper but are still significant downturns.
GM was hurt by stringent competition in their pivotal mid-ranged SUV models, while Ford losses stem from their narrow pool of recent models to choose from.
These numbers are indicative of another fact: China car sales are falling. 2018 numbers, as announced by the China Association of Automobile Manufacturers (CAAM), reflect that automobile sales in China dropped for the first time since the 1900s.
May 2019 automobile purchases plummeted by 16.4%, as compared to the same month last year. Following the March 5.2% and April 14.6% skids, May 2019 marked the 11th straight month of car sales decline.
GM sold about 1.57 million units in China in the first semester of this year, while Ford delivered about 290,000 vehicles. China’s car factory activity also declined in June, because of the declining domestic demand and rising U.S tariffs.
CAAM also released data outlining that the U.S companies’ market shares in China passenger vehicles fell by 1.3%, to a 9.6% share in the first five months of 2018, from a 10.9% share in the same period as 2017.
CAAM is expected to release June sales in the near future, and industry experts expect that the recession will continue into the negatives.
Sprucing Up the Market
GM and Ford, and their competitors are switching it up by planning to release new models and re-releasing old models with improvements. These plans are in hopes of rejuvenating the China car industry, bringing the numbers back up again.
GM is currently partners with SAIC Motor Corp, which makes the Cadillac and Chevrolet models. It also has another joint venture with SAIC and Guangxi Automobile Group, who make simple minivans but have recently branched out to higher-end cars.
GM sold about 3.64 million automobile units in China last 2018, still a substantial number, but lower than the 4.04 million figure of 2017.
The Chongqing Changan Group and Jiangling Motors Corporation partners with Ford to make their cars in China. Another partner has cropped up in the form of Zotye Automobile Co, and Ford has said that this partnership will allow them to sell lower-priced cars.
Another U.S car manufacturer, Michigan-based The Dearborn, is hard-pressed in revitalizing its steadily declining China sales, even if the country is its second largest market in the world. A whopping 37% drop in sales summarized the carmaker’s 2018, after a 6% fall in 2017.
The brands are devising plans to modernize old models or make new models altogether. GM has put down strategies to integrate 20 or so models, both new and furnished variants, over the course of this year.
A GM spokesperson announced that the planned new models would slowly arrive in the second semester of the year, with a marked focus on mid to large-sized vehicles and luxurious cars.
On the other side, Ford also said that it plans to bring to China its luxurious Lincoln brand, as well as a release over 30 new car models in China, over the span of next few years. One-third of which will be electric-powered vehicles, a kind which is slowly gaining popularity and market share because of its pro-environment properties.
Ford already released new models in the past, such as Focus and Territory, in an attempt to bolster their China sales.