Perhaps Ford and General Motors should ask for tariffs to be reduced to China's level of ownership
51% to their 49% on Joint Ventures.
The appear of American brands is definitely going to tank as the U.S. beefs up resistance to China; the companies will need all the help they can get.
I've been living and working in China for past 10 years. I've watched our "small" city (7 million people) become choked with cars, as more and more people achieved a good enough income to afford one.
Car ownership here is a huge status symbol. Often potential brides won't look twice at a man who doesn't have a nice apartment and a car. It's also a major burden and inconvenience.
It's very expensive relative to income. Not only do you have to pay licensing and insurance, you will also have to pay an exorbitant rent for your parking place in your building. Parking away from home is limited. Cars can often be seen idling in line outside of a parking garage. People double and triple park.
Traffic jams are epic. All Chinese cities have decent mass transit systems. Big cities have modern, extensive subway and train systems. The high speed rail system is ever expanding. The ride sharing company, Didi provides affordable transport virtually anywhere. Inexpensive electric motor bikes are the preferred vehicle to own.
All of my shopping needs are within a ten minute walk of my apartment, which is typical. There is no way that I would own a car here.
It's no surprise that young people here are opting for a no car lifestyle. The car industry in general will probably stagnate here. Even though status symbols are a big part of Chinese culture, they are also very practical.
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@emsique
Yes Gridlock becoming common occurrences. Public Transit inexpensive and frequent. But I lived in LA when the same was true and Transit fell to 'Freeway.'
China will need to learn the financial benefits of parking garages but maybe 'practical' will win.
There is a shakeout coming among the world's car makers and it could get very interesting. The companies are among the biggest consumers of glass, plastic, steel, aluminum and electronic components, so national governments will tend to be protective.
Cars and trucks are getting so expensive to buy that they are commonly being financed for 6-7 years instead of the shorter terms common back in the day. One can just guess how much more expensive the unwanted (by customers) autonomous driving nonsense will add to the price of a car- I have yet to hear anyone clamoring for a self-driving car outside of the industry.
It is interesting to note that "foreign" makes like Honda, Toyota, Volkswagen, and Nissan are building in the US as Ford, Chrysler/FIAT and Government Motors have been investing in China and Mexico. There should be no bailout this time- let them go away.
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Shouldn't American labor unions be making these cars and car parts. Look what happens to cities when their manufacturing is sent overseas.
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I've never understood the rush of US mfrs to China to set up factors and distribution systems. I get that China presents growth opporunities that the US no longer offers. But what about the overlying political risk?
Well, the US car makers rolled the dice and they have come up a pair of ones. They've just lost their way. Maybe it's time to let them go.
4
More bad planning by US automakers, here compounded by the inevitable reaction byto Trump's erratic actions in terms of trade and the world economy?
US companies are *still * obsessed with huge, ugly, gas-guzzling boats --large "Chevrolet and Buick models, "Cadillacs" and "Chrysler’s Jeeps."
Most of these lines regularly come in at the bottom of evaluation lists of cars in terms of basic building quality, vehicle "fit and finish," and reliability. So is it a real surprise that production of these models falling off?
Bad planning, poor quality, CEOs with stratospheric salaries and perks who act to pump up the value of their golden parachutes, and terrible national economic policies... Talk about greasing the skids to the bottom!
9
The Chinese government rolls American business on the sidewalk for spare change.
3
China is a late-developing HUGE low wage country. It is controlling the pace of development and that is keeping wages down and consumption contained. Its low wages corral a large market share and its unfair behavior and subsidies add to an impressive advantage that is already in place.
The free trade model was never meant to be applied to a situation like this. And what we have had in recent years has been nothing like free trade.
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I hope GM doesn't acquiesce to give technology to China. There is plenty electronic technology which can be applied to other types of types of purposes.
The Chinese market loves Buick. I am certain they Chinese will appreciate the allure of U.S. manufactured products more than Chinese made Buick.
To be fair, Buick is a well designed product significantly below the cost of its competitors.
2
Good to see how the big three hoped to make a killing in China and their success.
Clearly trumps attack on trade is solely to allow Americans to exploit the massive Chinese market.
Sadly the Chinese consumers are well aware of the utter contempt trump and his supporters have for them as a nation and as a people.
They can therefore can spend their cash on sophisticated home grown Chinese makes.
2
Those companies get what they deserve for moving jobs to China. Crocodile tears.
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Has anyone read the 80's book "Beijing Jeep"? Details AMC's debacle, before all the other American auto debacles. I guess I'm just really smart.
1
American cars are garbage. I'd own a Corvette Grand Sport. It's shameful how bad they are.
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LOL. The Pig Three overreached in their stretch for the Golden Fleece. Instead they were fleeced! The mediocre Buicks, Dodges and Navigators went bust in China. They're bloated whales here - and there. What a shock. Even a huge taxpayer bailout couldn't sustain these tin Titanics.
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It's telling that the German cars are still selling in a down market. One lesson that Detroit seems unable to learn is that quality is necessary to compete in the world market. German cars are expensive to buy, to repair but retain their value. There is value in a quality product over it's life time. Detroit's products lake this reputation.
Detroit should pay their executives less, pay it's employees more since quality is related to a stable workforce and look beyond Wall Street's quarterly dividend.
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@GTR
The Focus RS is one of the most well-reviewed Fords in years. It was, I believe, built in Germany.
1
What happens to the US auto industry when the Chinese auto industry completes its shift to the all-electric vehicle? Will US tariffs on those electric cars shut the Chinese out until the US auto industry catches up to the Chinese?
or will US trade policy give up on tariffs before the US automakers are ready with competitive electric thereby giving the Chinese auto industry a strong foothold in the US?
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India is the next big car and gasoline market. China will continue to be important but I fear its days of double digit growth are over.
5
The Chinese game plan all along was to lure the major automakers and steal their technology so the country could develop its own auto industry. Now that capacity and quality are good enough, the Chinese will toss out western companies and work to overtake them in global markets. It’s happening in many other industries as well.
It would be wise for the West to remember that World War II was largely won through America’s industrial might. Now that such capacity is shifting to China, we need to be wary as to how it will be used. The turmoil that Trump has created only distracts us more from this growing danger.
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@LIChef Yea, China only got pushy after Trump got in office right?
2
@LIChef
This is in fact (one arm of) China's technology development strategy, not just for the auto industry, but to fully acquire ALL the latest technologies developed in the west. Programming, engineering, pharmaceutical, aerospace, military, etc. You name it, they are trying to get US/ EU companies to set up fully functional manufacturing facilities up that operate with western quality and regulation standards, and to get us to train the personnel too; all in china. Do readers think that's somehow for the US/ EU corporation's benefit?
Another arm of the tech acquisition strategy is to send students to the US to ultimately work in us factories, and to learn all the processes/ procedures/ standards/ trade secrets that allow western companies to operate & manufacture at the relatively high level that they do. Then, eventually many of them return to the China mainland to start up/ participate in the rapid growth of the tech industries there.
A third, well known arm of the Chinese tech acquisition strategy, is simply to steal the information from western companies. By infiltrating the information systems, main frames, and even personal computers of employees, for the extraction of data & documents of every sort from probably every name brand tech company. Industrial espionage by China is in fact a longstanding issue, but don't think Donald or any other western leader has power to end it, or that it will somehow stop.
We can count on China's pursuit remaining relentless.
15
Major industries like this a extraordinarily complex. They also require companies to make huge go-no-go decision. I don't blame the US auto makers for making the investment but I would expect them to have a very clear Plan B. Just consider the risk/reward calculation in a country like China!
There is virtually no benefit to the American citizenry from the production of American cars in China. There is benefit to the American companies and their stockholders. But who cares!
What is in our interests is to produce cars in America and sell them to Americans. Think about it.
The autoworkers who produce the cars, and the other American workers who produce parts and material for the cars, will then buy other products and services (restaurant meals, healthcare, schooling, movies, and a wide variety of manufactured goods that we are quite capable of producing at home.)
Producing goods and services here at home, and consuming them here at home, creates a virtuous circle that feeds off itself.
Think about it!
29
The Chinese are about themselves. In every way. And they've learned a good part of that from the US. Problem is that they're better thieves than we are and way more brazen about it. I once attended a sales meeting where a US company was presented hybrid electric vehicle conversion technology under NDA to guests from China. Midway through the session, one of the guests stood up, raised an SLR camera with a giant lens to his face, and proceed to snap photos of the exhibit. No sale was ever made...
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@June
You seem to conveniently ignore that America and it's corporations also have industrial spies around the world stealing other country's secrets.
7
No surprises here. Silver lining is fewer internal cumbstion vehicles in the future is not a bad thing. However if they plan to charge their electric vehicles from coal fired power plants one poison is just being substituted for another.
Given the capacity that they’ve built it’s likely they are planning to be a trade problem for the rest of the industry. The big three helped to teach them how to better design and manufacture vehicles...all that’s left for the teachers is only regrets.
4
@Buck
Of course it would be ideal if the electric vehicles were being charged off of a renewable energy source; but I believe with that kind of scale in power generation we're talking about, it still would beat the overall discharge from all those autos that run on oil.
And it would be that much closer to moving in a healthier direction, hopefully.
"However if they plan to charge their electric vehicles from coal fired power plants one poison is just being substituted for another. "
1
The slow down and crash of the Chinese economy has been forecast by US journalists for over two decades. The Chinese economy has slowed from nearly 10% annual growth to something over 5%. Cant imagine the US economy achieving a high 5% growth rate in the best of times.
4