Trade war puts US auto sector at risk

By Li Sikun and Ma Jingjing Source:Global Times Published: 2018/4/3 21:03:40

European, Asian, domestic brands will fill gap

China-US automobile cooperation is mutually beneficial and a trade war in the sector is meaningless, Chinese automobile industry experts told the Global Times on Tuesday.

"The US will lose the huge Chinese market if a trade war breaks out," Xu Haidong, assistant to the secretary-general of the China Association of Automobile Manufacturers (CAAM), told the Global Times.

"In 2016, US automakers raked in profits of around $4 billion from Sino-US joint ventures, which does not include other income from automobile imports and technology transfers," he said, adding that "US automakers will lose development opportunities if they lose the Chinese market."

China is a growing automobile market, with an annual production capacity of above 30 million vehicles. It is also the best market in the world for new-energy vehicles, considering its infrastructure and government support.

"If there were a trade war, US automakers are likely to discover quite quickly that their access to the Chinese market is limited," Xu said.

Dong Yang, vice director of the CAAM, told the Global Times that "Sino-US automobile cooperation definitely benefits the US," due to the improved  competitiveness of US automakers.

At present, General Motors sells 4 million vehicles in the Chinese mainland, while Ford posted sales of 930,000 and Chrysler 150,000 in 2016, Dong said. If it were not for their great development in China, these three brands would be second-rate automakers today, he noted.

Sino-US cooperation also helps US automakers open up markets in developing countries, Dong said.

"For example, GM established a pan-Asia Technical Automotive Center in Shanghai and developed the Chevrolet Sail sedan. Annually, around 40,000 to 50,000 units are resold to South America. Meanwhile, GM's Chinese partner, SAIC-GM-Wuling Auto, is now fully in charge of GM's projects in India," Dong said.

Both experts noted that a trade war will have little influence on the Chinese market, considering the substitutability of US cars and components.

If certain US automakers retreat from the Chinese market, German, French and Japanese automobiles, as well as domestically made ones, will soon fill the void, Xu said, adding that there will be no adverse influence on Chinese consumers.

US automakers' overall market share is lower than their German and Japanese counterparts, according to CAAM. Data from CAAM showed that some 3 million US automobiles were sold China in 2017, representing 12.3 percent of total sales in China.

Posted in: ECONOMY

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