Sign in to follow this  
Followers 0
RA

Domino Effect: Chinese Auto Sales Post Worst-Ever Monthly Decline As Trade War Intensifies

Recommended Posts

China reported the worst-ever monthly sales drop in the world’s largest vehicle market on Wednesday, exacerbating concerns over the country’s economic slowdown and growing impact of an ongoing trade war with the United States. Sales tumbled 16.4% in May from the same month a year prior, the China Association of Automobile Manufacturers (CAAM) said. That marked the 11th consecutive month of decline and followed falls of 14.6% in April and 5.2% in March. Xu Haidong, CAAM’s assistant secretary general, said one key reason for the drop was provinces implementing “China VI” vehicle emission standards earlier than the central government’s 2020 deadline, stoking uncertainty among manufacturers.“We gave the manufacturers too little time to prepare,” he said, adding that the industry’s supply chain was finding it difficult to keep up with market changes. Automotive sales in China contracted for the first time last year since the 1990s as a slowing economy and tit-for-tat import tariffs between Beijing and Washington affected consumer sentiment.

  • Great Response! 1

Share this post


Link to post
Share on other sites

Still, they have a big card in their hand: from smartphones to cars and defense missiles, modern U.S. life depends on rare earth elements...

  • Rolling Eye 1

Share this post


Link to post
Share on other sites

Struggle is continuing..and of course trade war are not just about goods...

 

image.png.9d0531136839a38a9d2983412512f765.png

  • Like 1

Share this post


Link to post
Share on other sites

12 minutes ago, pinto said:

Still, they have a big card in their hand: from smartphones to cars and defense missiles, modern U.S. life depends on rare earth elements...

I agree that rare eart minerals has a important role as a "critical source" especialy for tech. cos. electric cars.. But, I' m not sure that their role is "crucial" in this war

  • Like 1

Share this post


Link to post
Share on other sites

23 minutes ago, rainman said:

China reported the worst-ever monthly sales drop in the world’s largest vehicle market on Wednesday, exacerbating concerns over the country’s economic slowdown and growing impact of an ongoing trade war with the United States. Sales tumbled 16.4% in May from the same month a year prior, the China Association of Automobile Manufacturers (CAAM) said. That marked the 11th consecutive month of decline and followed falls of 14.6% in April and 5.2% in March. Xu Haidong, CAAM’s assistant secretary general, said one key reason for the drop was provinces implementing “China VI” vehicle emission standards earlier than the central government’s 2020 deadline, stoking uncertainty among manufacturers.“We gave the manufacturers too little time to prepare,” he said, adding that the industry’s supply chain was finding it difficult to keep up with market changes. Automotive sales in China contracted for the first time last year since the 1990s as a slowing economy and tit-for-tat import tariffs between Beijing and Washington affected consumer sentiment.

Seems like a two way street: 
As China’s car market cools, American manufacturers are among those getting hurt the most

https://www.bloomberg.com/news/articles/2019-06-12/american-cars-lose-shine-in-china-as-trade-tensions-simmer?utm_source=twitter&utm_campaign=socialflow-organic&cmpid%3D=socialflow-twitter-australia&utm_medium=social&utm_content=australia

  • Like 1

Share this post


Link to post
Share on other sites

7 hours ago, ThunderBlade said:

I agree that rare eart minerals has a important role as a "critical source" especialy for tech. cos. electric cars.. But, I' m not sure that their role is "crucial" in this war

They are not  (crucial).

Note that the biggest category in terms of value for US exports is aircraft.  Basically, that is Boeing, which if totally barred would take a $15 billion hit.  However, Boeing's order book is filled for years in the future, so it is not obvious that it has any immediate impact on the company's earnings.  At one point China demanded that Boeing do manufacture inside China and also provide for technology transfer, which Boeing (in my view) foolishly agreed to.  China is now building up its own domestic airliner construction business, although I don't see the Western markets accepting those any more than Western markets accepted the Russian Sukhoi S-100 Superjet.  

The next large export category in terms of tonnage is soybeans, fed to Chinese animals  (pigs) as feed.  Right now that market is taking a big hit.  But remember that soybeans is a volume commodity; a farmer might have to churn one million lbs of soy in order to earn a residual for himself of $60,000.  In that environment, the US can easily simply pay the farmer his net and have him plant nothing, banking the land into clover for soils regeneration.  So while ot looks horrendous on the surface, it is a factor that is cheap enough to counterbalance.  

Meanwhile, the Chinese have no real ability to exert leverage against the US by limiting or banning exports - including the rare-earth elements.  First, they are available from other countries, including from US sourcing, and second, limiting exports merely encourages the American buyers to seek out substitutes.  And in lots of products they are not critical items. For example, take the elements that are used in windmill generators.  You can easily build a generator using only copper.  The earths are used to make the generator part self-exciting, so that no external voltage is needed to start up current flow.  But that is not essential.  If you design the machine with wires to a battery, it will activate the field coils externally.  Remember that generators have been built for well over one hundred years without rare earth elements incorporated. 

So the Chinese, which rely on exports of manufactures and parts, are at a disadvantage.  The only reason they have not caved in is because of face-saving.  China sees itself as the dominant world power (and race), displaced only by the humiliation of the British forcing the opening of its markets to opium, and the British seizure of Hong Kong, plus their military sitting in some mainland ports. Remember that perhaps 25% of Chinese were opium addicts as a result of British militarism, an experience deeply seated in the Chinese mind.  They will do what it takes to save face and not be second fiddle, although in this case it would seem to be a losing battle.  Thus, overall I predict the Chinese will take the hurt, and China will go into economic recession. 

  • Great Response! 2

Share this post


Link to post
Share on other sites

9 hours ago, Pavel said:

Americans and Saudis love big vehicles. The rest of the world (that I know of) mainly love smaller vehicles. We love pickup trucks, vans, minivans, (by whatever name) and large sedans. Those who have to worry about fuel prices buy whatever they can that will be affordable. Those are Japanese or Korean in most cases. That is also the category that most Chinese want and need. Am I wrong?

Share this post


Link to post
Share on other sites

12 minutes ago, ronwagn said:

Am I wrong?

Chinese buyers don't live in Texas!

  • Haha 1
  • Upvote 1

Share this post


Link to post
Share on other sites

1 hour ago, ronwagn said:

Americans and Saudis love big vehicles. The rest of the world (that I know of) mainly love smaller vehicles. We love pickup trucks, vans, minivans, (by whatever name) and large sedans. Those who have to worry about fuel prices buy whatever they can that will be affordable. Those are Japanese or Korean in most cases. That is also the category that most Chinese want and need. Am I wrong?

Chinese economy is hurting because of the tariffs, the Chinese gov is paying all kinds of monies to keep the heat off  ( they are paying  export tariffs/import tariffs, types of VATs, rebates, tax credits etc to companies) they control the press so we dont hear the facts coming out of China.

  • Upvote 1

Share this post


Link to post
Share on other sites

53 minutes ago, ceo_energemsier said:

Chinese economy is hurting because of the tariffs, the Chinese gov is paying all kinds of monies to keep the heat off  ( they are paying  export tariffs/import tariffs, types of VATs, rebates, tax credits etc to companies) they control the press so we dont hear the facts coming out of China.

The Communist Party leadership will do what it takes to keep the lid on.  Plus, they have this enormous felt need to save face, and not look as if they have been beaten by the Americans  (or, for that matter, by the West).  The Party does have a large reserve of cash, so it can be afforded - for now.  But remember that vast amounts of Chinese Govt wealth has been squandered on totally unproductive assets.  they have built these vast cities that could house at least a quarter of the population in spanking new apartments but then cannot do transactions at market prices or even subsidized prices as the peasants and workers have no money.  So those apartment buildings and gigantic malls sit empty. 

So China is not nearly as wealthy as they pretend to be.  Nonetheless, they can and will absorb the hit for now. China may even outlast Trump in 2020, assuming The Donald is not re-elected or re-nominated. And yes, I see the stand-off going on for some time.  Nobody wants to back down. 

  • Upvote 1

Share this post


Link to post
Share on other sites

23 minutes ago, Jan van Eck said:

The Communist Party leadership will do what it takes to keep the lid on.  Plus, they have this enormous felt need to save face, and not look as if they have been beaten by the Americans  (or, for that matter, by the West).  The Party does have a large reserve of cash, so it can be afforded - for now.  But remember that vast amounts of Chinese Govt wealth has been squandered on totally unproductive assets.  they have built these vast cities that could house at least a quarter of the population in spanking new apartments but then cannot do transactions at market prices or even subsidized prices as the peasants and workers have no money.  So those apartment buildings and gigantic malls sit empty. 

So China is not nearly as wealthy as they pretend to be.  Nonetheless, they can and will absorb the hit for now. China may even outlast Trump in 2020, assuming The Donald is not re-elected or re-nominated. And yes, I see the stand-off going on for some time.  Nobody wants to back down. 

That is precisely what the Chinese gov is doing, keeping a lid on everything that shows that their gamble against the US or rather the Trumpster has failed miserably and continues to get worse. I was on a recent trip to China for about a week and met industry figures from different sectors, a majority of them are hopeful that the trade spat is resolved soon and they all believe that if it does because of the Trumspter, their economy will improve and will thrive in a much much better way than it has in a one sided multi decade sham that has been going on.

I have numerous Chinese groups awaiting the resolution of the trade spat so they can bring in billions of $$$ to invest in the US in high end manufacturing and petchems.

The Chinese gov. is bleeding money from every financial orifice that exists. They are just paying way too much for everything and Brazil and Argentina are also jacking up their prices so every where they turn they have to pay more or less the same rates as the US goods with the tariffs.

Their giant ghost cities need more money they dont have to just keep them from collapsing. Their energy and food dependence will never go away and the US and Canada have long been their most reliable and secure source for these.

 

  • Great Response! 1

Share this post


Link to post
Share on other sites

(edited)

6 hours ago, ceo_energemsier said:

That is precisely what the Chinese gov is doing, keeping a lid on everything that shows that their gamble against the US or rather the Trumpster has failed miserably and continues to get worse. I was on a recent trip to China for about a week and met industry figures from different sectors, a majority of them are hopeful that the trade spat is resolved soon and they all believe that if it does because of the Trumspter, their economy will improve and will thrive in a much much better way than it has in a one sided multi decade sham that has been going on.

I have numerous Chinese groups awaiting the resolution of the trade spat so they can bring in billions of $$$ to invest in the US in high end manufacturing and petchems.

The Chinese gov. is bleeding money from every financial orifice that exists. They are just paying way too much for everything and Brazil and Argentina are also jacking up their prices so every where they turn they have to pay more or less the same rates as the US goods with the tariffs.

Their giant ghost cities need more money they dont have to just keep them from collapsing. Their energy and food dependence will never go away and the US and Canada have long been their most reliable and secure source for these.

 

I hope you are exactly right. I would like to see a reduction in our trade with China and increased trade with freer nations even if it hurt us a little. We need to be a moral force for good and not an enabler of evil by our most dangerous worldwide opponent. I have nothing against the Chinese people, just their dictatorship. 

https://theconservativetreehouse.com/2019/06/12/more-tech-manufacturing-companies-exit-china-nintendo-and-sharp-plan-exits/x

More Tech Manufacturing Companies Exit China – Nintendo and Sharp Plan Exits… 

Edited by ronwagn

Share this post


Link to post
Share on other sites

(edited)

15 hours ago, Jan van Eck said:

The next large export category in terms of tonnage is soybeans, fed to Chinese animals  (pigs) as feed.  Right now that market is taking a big hit.  But remember that soybeans is a volume commodity; a farmer might have to churn one million lbs of soy in order to earn a residual for himself of $60,000.  In that environment, the US can easily simply pay the farmer his net and have him plant nothing, banking the land into clover for soils regeneration.  So while ot looks horrendous on the surface, it is a factor that is cheap enough to counterbalance.  

I am not sure it is that simple. I imagine there are a lot of labor and logistics that depend on the soybean farmers. 

Edited by Rasmus Jorgensen

Share this post


Link to post
Share on other sites

3 minutes ago, Rasmus Jorgensen said:

I am not sure it is that simple. I imagine there are a lot of labor and logistics that depend on the soybean farmers. 

Not really.  The employees receive an income stream from unemployment insurance, and the logistics are shipment either by rail or by barge down the Mississippi.  Bulk freight is low-margin, low-value stuff, and the barges that would haul soybeans make little from the trade.  The net losses would be to payments on loans for the capital equipment, assuming there are loans, and those losses are offset under the Tax Code directly against other income.  The overall hit from the loss of the soybean trade is a lot lower then the sales numbers might suggest, as so much of those sales is nothing more than dollar churn. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  
Followers 0