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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.
China has recently become one of the biggest markets in the world. They are buying more new cars than any other nation and just about every brand that wishes to become successful opens up a dealer network in this developing market.
One of the biggest benefactors has been the American auto industry, with marques like Buick selling more cars in China than even the U.S. Now that will likely change.
As a result of trade spats between these two nations, China will impose duties on all U.S. made vehicles as of tomorrow, as stated on their Commerce Ministry website. The duties will range from 2% to 21.5%.
In what the Chinese are calling an “Anti-dumping” act, vehicles made by General Motors will face between 8.9% and 12.9% duties. Vehicles made by Chrysler will range from paying 6.2% to 8.8%, while U.S. built BMW and Mercedes-Benz vehicles will face 2.0% to 2.7% duties.
The Chinese ministry says the U.S. built vehicles had thus far enjoyed subsidies, but they are now causing damage to their domestically produced vehicles. These new duties will stay in effect for two-years, at which point they could be removed or re-instated.
Could this be the start of a new trade war? Very possibly yes.
[Source: Automotive News]
The EPA will announce Friday that it has approved the use of E15 gasoline for vehicles made after the year 2000. The EPA previously approved the added ethanol content for vehicles made after 2007 – the new regulations would see the amount of vehicles able to use E15 grow exponentially, and directly benefit American corn farmers, whose crop is used in the production of ethanol.
The increased use of ethanol has been roundly criticized for its effect on food prices (more corn used for fuel causes the price of maize, a staple crop for much of the world, to rise), its environmental impact and the simple fact that most small engines are not designed for a such a concentration of ethanol.
Although ethanol is touted as a “green” fuel, the higher blends of ethanol in gasoline can have the effect burning out the catalytic converters, resulting in higher emissions.
[Source: Left Lane News]
Canadians get a raw deal when it comes to cars. Even though their dollar is worth a little bit more than the greenback (and is projected to rise in the near future) cars still cost about 30 percent more on average. Due to the discrepancy, it’s common for Canadians looking for luxury vehicles to buy their cars in the United States, and import them back to Canada, where savings can be in the thousands, despite importation fees and taxes.
Porsche cars have been a popular choice for importation, due to the significant delta between USA and Canadian pricing. A base Boxster, for example, cost about $46,000 in the USA, while the Canadian MSRP was $58,000. The difference in higher end vehicles, like the 911 GT3 or 911 Turbo S was even higher, edging closer to a $20,000 gap.
Porsche Canada has responded by cutting the MSRP of its cars closer to USA prices. A Boxster now rings in just under $55,000, but still remains shy of the USA’s $47,600 sticker. Discounts remain similar for much of the range, but notably exceptions like the 911 Turbo S get a 5 figure discount.
Regardless, the price cuts don’t come close to bringing the prices to parity. With one-tenth the population, and different equipment requirements for such a small market, not to mention a small dealer network, the extra costs that can’t be amortized over a larger population are passed on to the consumer. Whether the discounts are deep enough to stop consumers from going over the border remains to be seen, but according to one dealer who AutoGuide spoke to before the discounts, the entire run of Cayennes has been sold out for the year, with Panameras moving briskly. Evidently, those with the means to buy a Porsche may not have the time to go through the hassles of importation to save an amount they consider inconsequential.