Automotive giants including Volkswagen AG, Ford Motor Company, PSA Group and Renault SA are worried about the United States-China trade war.
The Chinese market, which has been the two-decade, billion-dollar investment target for autogiants, has balked at lower showroom sales.
Bloomberg reports “flagging profits” and “weakening sales outlooks” are to blame for China’s faltering vehicle market, caused by the trade war with the US which saw the stock market slide last last week.
The Chinese new car sales market with its 1.4 billion population has been matching the stock market slide for four consecutive months.
VW warns that the company’s forecast of 4% growth in China is expected to be slashed, while Ford president Jim Farley reports “a weaker market” in the latest quarter caused by China removing purchase incentives like tax rebates.
China increased levies on vehicles imported from the US to 40%, while also lowering the duty paid on on other imports to just 15%.
Former Fiat Chrysler vice-president Bill Russo, who now runs auto consultancy Gao Feng Advisory in Beijing, says growing interest in ride-sharing is another cause.
“Mobility demand is increasing as China continues to urbanise, however, traditional carmakers are not positioned to capture this demand growth,” he tells Bloomberg.
BMW and Daimler have already warned of lower profits and Jaguar Land Rover has been forced to temporarily close its Chinese manufacturing.
However, Daimler chief financial officer Bodo Uebber says “good growth rates” are expected for Mercedes-Benz.
