United States Overrun By China

Bertel Schmitt
by Bertel Schmitt
united states overrun by china

Never has the term “Red China” been more appropriate than in the last month. The U.S. is staring into China’s taillights. In January, the unthinkable happened. China dethroned the United States as the world’s largest car market. Not for the year. For one month only—so far. Even the biggest optimists (or pessimists, depending how you look at it) didn’t expect (fear) that China would outsell the U.S. before 2015.

The story unraveled during GM’s monthly sales call on Monday. Michael DiGiovanni, GM’s executive director of global market and industry analysis, dropped the remark that an estimated 790,000 vehicles were sold in China in January. Total U.S. sales in January were about 668,000, DiGiovanni estimated. Automotive News [sub] thinks Di Giovanni is an optimist. According to their tally, 656,881 vehicles were sold in January. DiGiovanni’s Chinese number was even news to China, where official counts are not yet available.

“This is the first time in history that China has passed the U.S. in monthly sales,” DiGiovanni said. “We are estimating that China is going to come in at 10.7 million seasonally adjusted annual rate in January. The U.S. industry, we estimate at about 9.8 million SAAR.”

What happened?

U.S. auto sales dropped 37.1 percent in January. Chinese sales grew—how much will be unclear until official numbers are released. As reported a few days ago, some Chinese car makers, especially those catering to the smaller segments, report double digit growth rates for January.

Financial Times jumped on the story also opining that Di Giovanni may be an optimist: “Autodata, a market research firm, put total estimated annual industry car sales at 9.6m, their lowest level since 1982.” According to FT, “the slump came in spite of generous incentives offered by carmakers last month, including employee pricing deals, and an infusion of federal cash to the carmakers’ lending arms. GMAC and Chrysler Financial are accessing a total of $7.5bn of troubled asset funds.” In other words: Even a megadosis of heavy drugs couldn’t save the U.S. from being overtaken by the Yellow Peril. The Chinese side did comparatively little to stimulate growth. China cut the sales tax in half on cars less than 1.6 liters—which came in effect January 20th, too late to have a considerable impact before China closed for the Spring Festival in the last week of January.

Despite an economic downturn, China reports strong retail sales for January, and China’s government announced that the worst may already be over. U.S. carmakers are less optimistic. “Today we’re at the vortex of the economic downturn, and it’s difficult to talk about recovery,” said Emily Kolinski Morris, Ford’s senior economist. Only after looking really long and hard, she found “some faint signals emerging that we may be nearing the bottom.” GM’s DiGiovanni said he believes US car sales would exceed China’s for the full year of 2009, “although China’s could be higher if the US stimulus package was less effective than hoped.” Message from GM to DC: Keep the bailout money coming if you don’t want to be overrun by China. Which may be the reason why GM released the numbers before they are officially available in China.

A word of caution: China counts “motor vehicles” different that the U.S. Anything with wheels and an engine—motorbikes, tricycles, cars, trucks—qualifies. The “light vehicle” count is unknown in China. Which shouldn’t be news to an executive director of global market and industry analysis of the world’s second largest automaker. Did he overlook that little detail intentionally to rattle Washington?

Be that as it may, sooner than later, China is bound to outclass the U.S. of A. It’s sheer numbers. Whereas the US has an obscene number of 760 cars per thousand, China only has 30 to 40, depending on which statistics you rely on. China has unlimited room to grow, while the U.S. will need at least 5 years to get out of its housing and credit morass.

PS: According to Financial Times, “Asia’s carmakers led a rally across the region’s stock markets as figures showed they outsold their American rivals to account for just under half of sales in January in the US, the world’s biggest vehicle market. Signs that China’s stimulus package may be starting to work provided another fillip to shares.” They forgot to stick in “formerly biggest.”

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2 of 8 comments
  • Obbop Obbop on Feb 05, 2009

    Oh yeah? Well, my American junior high drop-out kid can whip your China honor roll kid any day of the week except Sunday when my kid is in the basement all day playing video games.

  • Joeaverage Joeaverage on Feb 05, 2009

    Have you seen the YouTube video where somebody plays with statistics and figures that since some tiny percentage of any population are geniuses that there are more Chinese geniuses than American geniuses? Sobering thoughts. Whatever the case I think it is time to quit celebrating the idiot entertainers and pumped up athletes and start celebrating the kids who excel at the sciences. You know - the football jock isn't as big a deal as the academic bowl kids! Plenty of good things the science kids can work at in America. Still PLENTY of things that could be refined and redeveloped. Transportation is certainly one of them. Two tons of car to haul 250 lbs of human? Seriously?

  • Damon Thomas Adding to the POSITIVES... It's a pretty fun car to mod
  • GregLocock Two adjacent states in Australia have different attitudes to roadworthy inspections. In NSW they are annual. In Victoria they only occur at change of ownership. As you'd expect this leads to many people in Vic keeping their old car.So if the worrywarts are correct Victoria's roads would be full of beaten up cars and so have a high accident rate compared with NSW. Oh well, the stats don't agree.https://www.lhd.com.au/lhd-insights/australian-road-death-statistics/
  • Lorenzo In Massachusetts, they used to require an inspection every 6 months, checking your brake lights, turn signals, horn, and headlight alignment, for two bucks.Now I get an "inspection" every two years in California, and all they check is the smog. MAYBE they notice the tire tread, squeaky brakes, or steering when they drive it into the bay, but all they check is the smog equipment and tailpipe emissions.For all they would know, the headlights, horn, and turn signals might not work, and the car has a "speed wobble" at 45 mph. AFAIK, they don't even check EVs.
  • Not Tire shop mechanic tugging on my wheel after I complained of grinding noise didn’t catch that the ball joint was failing. Subsequently failed to prevent the catastrophic failure of the ball joint and separation of the steering knuckle from the car! I’ve never lived in a state that required annual inspection, but can’t say that having the requirement has any bearing on improving safety given my experience with mechanics…
  • Mike978 Wow 700 days even with the recent car shortages.