How much can European Car Manufacturers Gain from the China Market?

Published Date : May 05, 2015

A senior official at BMW stated that over the last couple of years, the company has not been earning favorable profits in the China market since the performance has not been very satisfactory. With a situation like this it has been quite difficult for the company to attain a certain contribution margin that it had almost three to four years back. 

Several weeks later the German car manufacturer Audi stated that being a key market leader in the China automobile market it concluded that the sales figure in March increased by almost 1.5%. On the other hand, Volkswagen was unsuccessful in enhancing the sales volume in China in the 5th month from the past six months. Industry experts are also concluding that the remarkable growth of China pushing the performance of various industries, is sadly not the case anymore. 

Ongoing industry trends indicate that the auto market in China cannot be the way it was earlier owing to a major shift in China’s economic model which will be marked by the end of the times that witnessed massive gains and huge profit margins. The overall industrial demand also increased by 9.9% which led to the total of 19.7 mn passenger vehicles in 2014. During the same time, the country had registered the slowest rate of economic growth. Also, the rise could also be attributed to an increase in inexpensive minivans and SUVs that most Chinese automobile brands were selling in the market. 

As per the forecasts of the China Association of Automobile Manufacturers the overall sales of passenger vehicles will increase by 8% thereby reaching a total sales figure of 21.3 million by 2015. However, senior officials at Volvo are far from optimistic about the trends in the China market as regards the sales figure.