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Financial Crisis Hits China's Auto Exports

2008-10-16    Source:english.chinabuses.com

The deepening and widening US financial crisis has seriously eroded global real economy, including China's auto export businesses.


Monthly sale of the world biggest auto market, the North American market, dropped 26.6 percent in September, the worst result in a single month of the last 50 years. Morgan Stanley estimated that global auto sale will reach 58.1 million units this year, a drop of 0.3 percent year-on-year, the first decline in recent 8 years.


Auto exports drop more than 20%


China's auto export was discouraging, with 44,400 units sold to the overseas markets in August, a decline of 22.18 percent month-on-month and 11.29 percent year-on-year, according to the latest statistics from the China Association of Automobile Manufacturers.


In August, the total auto export value reached $4.7 billion, a drop of 1.53 percent month-on-month, but an increase of 23.32 percent year-on-year. For the first eight months, the total auto export value reached $34.35 billion, rising 36.5 percent year-on-year.


Export of Great Wall Motor, China's largest independent SUV maker, slowed down in September, 20-30 percent less than expected, because of the US financial tsunami and global economic turbulence, said Great Wall Motor spokesman Shang Yugui.


It'll be hard to reach the annual target of 70,000-80,000 units this year, he added.


Spare parts manufacturers facing challenges


Domestic auto parts manufacturers are facing challenges because of their incompetence in scale and technologies. According to the news that auto parts exported directly to foreign automakers dropped significantly this year, and it will take at least one year to restore the export level in this niche to that of the beginning of this year.


However, the demand in the US after-sale service market maintained 5 percent growth in the first half of the year with many people preferring to maintain cars rather than buying new ones.


Moreover, the US and the European customers' preference for China-made auto parts, which are more competitive in price, provide much better opportunities for Chinese automakers.


For most local auto parts makers, the impact on exports brought by the demand slowdown of the global market triggered by the financial crisis will be less than that of the RMB appreciation, according to Gasgoo.com.


Restructure of auto industry approaching


The financial turmoil doesn't only dampen consumer confidence but also accelerates the restructure of domestic auto industry.


"Petroleum maintains vehicles' blood while finance poles the industry's bones", said Zhong Shi, an independent auto industry analyst, "The industry unavoidably stepped into a downturn after being hit by the surging oil price and the US subprime crisis."


According to Zhong, indirect effects caused by the financial turmoil are spreading gradually. As exports are a very important part of China's economic growth, the manufacturing and service business will certainly be affected by western countries' decreasing demands.


The shrinking of national auto consumption will accelerate competition and restructuring between carmakers. China's first large-scale auto industry reshuffle is at the corner, he added.


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