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U.S. brands are losing ground in China, but don't blame Trump
Yang Jian | 2019/5/24

SHANGHAI -- The Trump administration slapped punitive tariffs on a broad range of Chinese goods in July 2018, inviting retaliation from Beijing. So far this year, America¡¯s car brands have lost quite a bit of market share in China. 

Are the two incidents related? 

Not at all. U.S. automakers have themselves, not President Donald Trump, to blame for their weak showing as the market cools.

In the first four month, U.S. brands¡¯ collective share of the new light-vehicle market in China dropped to 9.5 percent from 11 percent a year earlier, according to the China Association of Automobile Manufacturers.

Why have General Motors, Ford Motor Co., Jeep and other U.S. companies lost so much ground in such a short period?

Two leading American marques -- Ford and Jeep ¨C continue to post steep sales declines. 

Through April, sales of Ford-brand light vehicles plunged 60 percent to 68,916.

In the same period, deliveries at GAC-FCA -- Fiat Chrysler Automobiles¡¯ joint venture whose main products are Jeep models -- slumped 45 percent to 26,623.

SAIC-GM -- GM's joint venture with SAIC that builds and markets Buick, Chevrolet and Cadillac vehicles -- started to lose share at the beginning of this year.

New-vehicle sales in China contracted in the first four months, falling 15 percent to 6.84 million. 

SAIC-GM saw deliveries fall 17 percent to some 552,000 in the period, after dipping 1.5 percent last year. 

The reason behind SAIC-GM¡¯s slump is similar to that behind the drop in volume at the Ford and Jeep brands: a lack of sufficient new or redesigned models. 

GM is the second-largest carmaker in China, behind Volkswagen Group. But the Detroit automaker¡¯s speed in introducing new models has slowed noticeably. 

Since last year, SAIC-GM hasn¡¯t launched a new crossover or SUV even though such products remain popular with Chinese customers. 

By contrast, VW added three locally built crossovers and SUVs last year under the VW brand alone. Toyota Motor Corp. has also rolled out a series of locally produced models based on a new global vehicle architecture, known as TNGA. 

Led by VW and Toyota, German brands and Japanese marques increased their respective share to 23 percent and 20.7 percent in the first four months of 2019, from 20.8 percent and 16.9 percent in the same period last year.

The decline in American car brands¡¯ China share has little to do with Trump¡¯s aggressive trade posture. 

In July 2018, Trump imposed 25 percent tariffs on $34 billion of Chinese goods. Beijing quickly retaliated by levying an equal level of punitive tariffs on U.S. imports. Vehicles produced in the U.S. were subject to 40 percent custom duties at the China border. 

But in December, tariffs on U.S.-made vehicles were lowered to 15 percent after Trump and Chinese President Xi Jinping agreed to a truce. 

While FCA has reorganized its China operations, it hasn¡¯t figured out how to reboot sales. GM and Ford plan to bring more products to market.

GM will launch 20 new and freshened vehicles for Buick, Chevrolet, Cadillac and the Baojun market-entry car brand and the Wuling minibus marque this year. Ford plans to introduce more than 30 new and upgraded models in the next three years. 

But such plans may not be able to help American brands regain ground. 

For one thing, VW and Toyota also plan to step up new product launches in China. 

Trump this month ratcheted up his trade war against China by hiking tariffs on $200 billion in Chinese imports to 25 percent from 10 percent. In retaliation, Beijing has vowed to restore the tariffs it placed on American goods, including light vehicles, on June 1. 

So 2019 may well be just another bad year for American brands in China. 

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