Chinese Car Exports Go Poof

Auto makers in the developed markets had looked at China with optimism, and with fear. They were optimistic that the booming Chinese market would lift their worldwide sales. It did. They feared that the Chinese would export cars en masse, drowning Europe and the U.S. in cheap vehicles, wiping out factories from Wolfsburg to Detroit. They did not.

Weapons of mass destruction: Nevertheless, red alert was sounded each time a Chinese car appeared at an auto show in Frankfurt, Geneva, Paris, or Detroit. weapons of mass destruction were deployed to ward off a Chinese invasion: Chinese cars were crashed, and grisly results were published, sometimes coincidentally timed adjacent to those auto shows. An insider close to the matter said: “If you have a lot of money, you can crash a lot of cars. There’s always one crash that looks real horrible. That’s the one you will see on YouTube.”

Market crash: This year, terrifying crashes of Chinese cars were conspicuously absent before the Paris Auto Show. Maybe it was because Edmund’s AutoObserver reported from the show: “The era of Chinese car exports may have ended before it even began.”

Only two Chinese auto companies showed up for the show. One was Brilliance, BMW’s joint venture partner in China. The other was the French distributor of Shuanghuan Automobile. Both were pretty much ignored.

There was no need for car crashes. The auto markets did the crashing themselves. Auto sales in the U.S. went down 26 percent in September. In Japan, car sales are at their lowest level in more than thirty years. European markets are in the doldrums.

Chinese new car exports drop: This was immediately felt in Chinese new car export numbers. August witnessed the first monthly decline over recent years in China’s car exports, due largely to shrinking demand overseas. According to the China Association of Automobile Manufacturers (CAAM), China sold abroad 44,400 motor vehicles in August 2008, down 22.18 % from the previous month, or 11.29 % from a year earlier. Analysts see this trend to accelerate as the full impact of the market crash is being felt, and as the cars in the pipeline from China remain unsold.

In 2007, China had exported a total of 612,700 vehicles, up 78.95 % from a year earlier. For the first eight months, the total Chinese auto export value rose 36.5 percent year-on-year. Experts expect a decline for the rest of the year.

Different story for parts: For auto parts, the picture is rosy. Sure, according to Gasgoo , Chinese parts makers who focused on delivering OEM parts to foreign new car manufacturers, saw their sales “drop significantly this year.”

Manufacturers who deliver to the after-sales market are in a much better situation. Many people prefer to maintain cars rather than buying new ones. The semi-official newspaper China Daily said: “The US and the European customers’ preference for China-made auto parts, which are more competitive in price, provides much better opportunities.