The automobile market slump in China: A global threat?

Soňa Benecká

A chapter in CNB Global Economic Outlook - October 2019, 2019, pp 12-16 from Czech National Bank, Research and Statistics Department

Abstract: The Chinese car market is contracting sharply and the media is predicting the collapse of the global car industry and, with it, the German economy. China has been one of the fastest growing markets in recent years and has tended to absorb shocks in global car demand. However, it has changed structurally, and the downswing will certainly not affect all automakers equally. For example, Volkswagen Group, whose profitability is affected by revenue from China, could be more at risk. Over the past year, the group has managed to slightly increase its share of the Chinese market, while US firms have lost significant ground there. By contrast, Å koda Auto, for example, should not be affected at all by a drop in revenue from China, and the Czech carmaker has even managed to slightly increase its market share in Europe - no easy task in a shrinking car market. Without a buffer, the competition between world car manufacturers will be become fiercer. Long-term market survival will be driven by innovation, especially in electromobility.

Date: 2019
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