First, there are still people who think the center of the auto business is and will always be the U.S. Yes, while the U.S. is still the most lucrative auto market in the world and it will always be a primary player in the global auto industry, the axis of the industry is tilting toward China. That’s not meant as a criticism of Detroit or the Big 3. It’s simply the reality.
The second reason China’s booming auto industry is important is because the automakers and parts suppliers best positioned to win in China will also have a better shot at long-term success. Look at GM and VW. They are neck and neck in the race for #1 in China and they are laying out plans to strengthen their operations in China. GM has eight plants in China while VW is in the process of adding three more plants.
Ford and Chrysler have much further to go. Ford is rapidly building sales in China, but because it was slow to invest in the country in the late 90’s Ford is playing catch-up. For example, Ford sold 519,390 vehicles in China last year compared to GM’s 2.54 million.
Chrysler is even further behind with annual sales in China totaling well under 100,000. Sergio Marchionneknows the potential of China, especially when it comes to SUV’s. That’s why he is looking to aggressively grow the Jeep brand in that country.
The point is that the future of the auto industry will continue to orbit around China. At some point, there will be a Chinese auto company that succeeds in selling outside of its home market. But for now, the focus for automakers is growing in China.
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