Both BMW And Toyota Warn That The Free Ride In China May Be Over

China has gone from growth engine to source of concern for carmakers, with BMW and Toyota becoming the latest companies to warn about the world’s biggest auto market slowing down.

BMW said decelerating delivery growth there may force it to lower this year's profitability goals. Falling share prices on China's stockmarket and a flagging economy have had a negative effect on consumer sentiment and in June the new-car market dropped for the first time in more than two years. BMW has cut production in China so far this year by 16,000 cars.

Toyota has also warned that its selling costs in China are rising at a time when the prices consumers are willing to pay are slipping.

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TheSteve - 8/5/2015 1:23:53 PM

+1 Boost

Our look at China was similar to how we looked at iPhones sales: Based on previous stellar sales numbers, we believe the trend will continue forever, and so we want in on that! Many manufacturers sold their souls to sell to China.

We're now learning that China's hyper-consumption trend was not sustainable, and there are a lot of investors feeling sick about that.

The only thing that's consistent is change itself.

dumpsty - 8/5/2015 1:35:25 PM

0 Boost

I wonder since many of the major automakers have production deals with Chinese manufacturers - making these coveted foreign imports "non-imports" & maybe less-likely to get Chinese buyers to pay inflated transaction prices. And I'm sure there are plenty of "knock-off" brands a-plenty...stealing expected annual sales from the mainstream original brands. Good luck with that.

And maybe the Chinese used car market has gotten much too strong as well. Making buying a new car less of a priority even for those that can afford a new car purchase.

dumpsty - 8/5/2015 1:53:50 PM

0 Boost

To expect year-to-year increases for 1-2 decades seems a bit unrealistic for any market or industry. There will be declines along the way. The key is to be capable of recognizing when a market decline/shift is coming & making production/financial forecast adjustments to accommodate the natural ebbs & flows of the economies.

When publicly traded companies only wish to please the (uninformed) investment community, these uncertainties tend to happen more often & with damaging results.