Global car markets slump, Trump worsens it

THE TARIFFS that President Donald Trump may impose on vehicles imported to the US would be just the latest kick in the teeth for carmakers battling cooling markets across the planet.

Findings of an investigation into whether imported cars could pose a national security threat were received by Trump last Sunday. That was hours before China reported yet another monthly slump in car sales.

The world’s largest auto market joins other regions including Europe and the US starting the year on a weak note, fuelling anxiety over an industry already grappling with falling profits amid record spending to finance the shift to electric and self-driving cars.

The persisting gloom in China, the engine room for growth over the past decade, leaves carmakers with few places to go. Japan is sputtering too, while volumes in other smaller markets aren’t enough to offset the declines in the biggest sales regions.

“Downward pressure is still there,” Gu Yatao, a Beijing-based auto analyst with Roland Berger, said of China. “The government isn’t adopting stimulating policies to give the market a shot in the arm.”

The global slowdown has hit earnings of almost everyone from Ford to Volkswagen and

Downward pressure is still there.The government isn’t adopting stimulating policies to give the market a shot in the arm. Gu Yatao, a Beijing-based auto analyst

Toyota to pile on the pressure as they spend on electrified and autonomous vehicles. In addition, trade woes, political upheaval and diesel’s demise are hurting consumer sentiment, while the increasing availability of ride-hailing and car-sharing services makes it less necessary to own a car.

Even with an expected recovery in China in the second half, the global car market will stall this year or grow just one per cent, said Janet Lewis, an analyst at Macquarie Group Ltd. in Tokyo. The US and European markets will be little changed, she predicts.

“You can’t expect mature markets to grow significantly,” said Zhou Jincheng, an analyst at research firm Fourin Corp. in Nagoya, Japan. “The complexity of global trade environment is not helpful either.”

Sales to China’s dealers plummeted 17.7 per cent last month as the world’s secondlargest economy slowed and negotiations with the US for a trade-war truce dragged on. Consumers stayed away from showrooms even with discounting by dealerships ahead of the Chinese New Year Holiday. Last year, the market contracted for the first time since the early 1990s.

That’s leaving manufacturers who’ve spent billions of dollars adding plants and production lines in China in the past decades uncertain if and when growth will return. Geely Automobile Holdings Ltd targets sales of 1.51 million cars this year, an increase of just 0.7 per cent from 2018.

Volkswagen, the number one foreign manufacturer on the mainland, is expecting further growth for the company this year, but has predicted the overall Chinese market to shrink in the first half.

Jaguar Land Rover Automotive’s problems in China forced its parent to take a US$3.9 billion writedown this month. Daimler and BMW reduced profit forecasts last year amid pressures from the US-China trade war that’s hit auto demand, while Hyundai said last month it’s letting workers go as it reviews production plans in the country. — Bloomberg