Automakers benefited greatly from China’s rapid growth over the past decade. Chinese appetite for automobiles has been a critical income for manufacturers around the world. Even General Motors sold more vehicles in China than in the United States.
However, China’s economy seems to be cooling. According to LMC Automotive, 2012 vehicle sales will only increase by 9.2 percent, less than half of last year’s growth. Compounding the issue, the Chinese government intends to curb the growth of foreign automakers in order to allow its domestic industry to thrive. When these new policies are in place, those automakers without assembly plants within China, such as Chrysler, may be shut out.
Something the global economy has experienced multiple times, rapid economic growth is often followed by a bubble burst. According to analysts, the Chinese market bubble may pop in just three years. Time will tell which automaker is best prepared for the inevitable market shift.