China Mess, Yuan Devaluation Spread to the US

[marmar]

China Mess, Yuan Devaluation Spread to the US
by Wolf Richter • August 14, 2015


China’s auto market, which had been the single most important element in the convoluted growth story of GM and other global automakers, was getting battered even before the yuan devaluation. But now elements coagulate into a toxic mix.

Sales of passenger vehicles in July dropped 6.6% from a year ago, to 1.27 million, according to the China Association of Automobile Manufacturers, a 17-month low, after they’d already fallen 3.4% in June, and after they’d relentlessly trended down since late last year.

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GM’s sales through its joint ventures fell 4% in July year-over-year, to 229,175 vehicles. Despite falling sales and ballooning price cuts, GM remains, at least in its press release, optimistic about sales and profit margins in China, its second largest market, and simply blamed “model changeovers and the phasing out of older Chevrolet vehicles.” So no biggie.

Ford’s sales through its Chinese joint ventures plunged 6% year-over-year, its third monthly decline in a row, to 77,100 vehicles. Unlike GM, it’s publically worried:

.....(snip).....

This is going to get messy. And some of the debris from the hard landing of the growth miracle that China used to be is going to hit US automakers, and not only them, but other US manufacturers with operations and sales in China. They too are wallowing through the same toxic mix. .................(more)

http://wolfstreet.com/2015/08/14/china-mess-yuan-devaluation-dropping-auto-sales-spread-to-the-us-gm-ford-chrysler-component-makers/

[Warpy]

1. Market saturation

That's what happens when everybody who can afford your product has your product. It was happening in China before the crash and unless China became more concerned with income inequality, it was there to stay. Most of those 1+ billion people are still poor.