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Is China’s Car Market About to Stall?

Sales to miss government’s already modest expectations; margins also softening.

by on Mar.22, 2012

Mercedes is reportedly slashing prices by as much as 25% in China.

At a time when the world auto industry was ready to collapse, the Chinese market offered a rare and desperately sought beacon of hope.  Even as demand in the U.S. market plunged to its lowest levels in decades, China continued to deliver double-digit growth, propelling the emerging market to global sales leadership.

Ironically, as the U.S. market recovery begins to heat up, China is showing signs of an unexpected slowdown – one that is proving particularly worrisome in the luxury segment, and which could slam manufacturers like Mercedes-Benz, BMW and Audi who have counted on China for a disproportionate share of their profits in recent years.

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For the year-to-date, Chinese light vehicle sales are down a notable 4.4%.  The China Association of Automobile Manufacturers now predicts overall sales will only grow by about 5% for the full year – missing the government’s goal of 7%.  By global standards, that’s nonetheless significant – but put into perspective it’s clearly worrisome when one recalls recent annual growth rates that, at times, approached 100%.


Jaguar Land Rover to Open Plant in China

Tata expected to double investment in JLR this year.

by on Feb.23, 2012

Jaguar has lots of new product coming and some of those models - perhaps the production version of the C-X75 - could be assembled at a new plant in China.

Jaguar and its truckmaking partner Land Rover have agreed to set up a plant in China, currently the world’s fastest-growing luxury auto market.

As with other foreign makers, Jaguar Land Rover will enter into a joint venture with one of the many local Chinese automotive companies.  While JLR’s parent, the Indian Tata Motors, has declined to reveal who the partner is the luxury maker was known to be talking to China’s ambitious Chery Automobile as recently as last autumn.

Jaguar has been struggling to plant itself into the luxury mainstream despite adding a number of new models to the line-up, such as the totally redesigned XJ sedan, the flagship model debuting in late 2010.  Land Rover has had a bit better luck with offerings such as the all-new Evoq – which was named North American Truck of the Year in January.

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But both brands are betting they can gain a leg up by going local in China, circumventing stiff duties on imported automotive products.

Specific details are being withheld until China’s regulators give the proposed deal their blessing, said Tata Motors’ chief financial officer C Ramakrishnan.