China's Auto Sector Forecast to Expand Despite US Tariffs
Fitch Ratings predicts increased production capacity in China's automotive industry by 2025 amid ongoing tariff challenges.
The automotive sector in China is anticipated to experience increased production capacity by 2025, as reported by a Fitch Ratings analyst at the Fitch on China 2025 event in Beijing.
The impact of US tariffs on China's auto exports is deemed limited, and multinational automakers are noted to be enhancing their production capabilities within China.
This assessment arrives in the context of US-imposed tariffs, which include a 25 percent tax on imported passenger vehicles and certain automobile parts, intended to bolster domestic manufacturing in the United States.
Wang Ying, the managing director of Asia-Pacific corporate ratings at Fitch, highlighted that many multinational and joint-venture automakers are focusing investments on new-energy vehicle (NEV) products aimed at the domestic Chinese market.
These investments are encouraging some companies to shift parts of their supply chains to China as they adapt to the evolving market conditions, including government policies and consumer preferences.
Wang also pointed to an increase in collaborative efforts between international manufacturers and Chinese partners, spanning research and development (R&D) and production within the NEV segment.
Such partnerships are projected to further enhance production capabilities in China, aligning with global trends toward localization in response to market dynamics.
Martin Hofmann, chairperson of the German Chamber of Commerce in China and executive vice president at Volkswagen, referred to this trend as "localization 3.0," emphasizing the shift towards R&D collaborations in the automotive industry across Europe.
In a recent development, General Motors announced it would cease exporting vehicles made in the U.S. to China, reflecting a strategic restructuring of its operations in the region.
GM confirmed its continued commitment to enhancing its core business and joint ventures in China to ensure sustainable profitability.
Porsche also disclosed that its R&D center in China had undergone strategic adjustments that unified its three major R&D entities in the country, marking a significant step in its localization efforts.
Forecasts from Fitch Ratings indicate that the retail sales growth in the Chinese automotive market will remain modest within a single-digit range by 2025. Conversely, the NEV sector is expected to sustain double-digit growth, with its share of overall vehicle sales projected to surpass 50 percent within the year.
In contrast, Fitch Ratings has adjusted its outlook for the global automotive industry from "neutral" to "deteriorating" due to the potential effects of U.S. tariffs, predicting that global automakers may face increased production costs and may need to raise prices accordingly.
The agency has revised its vehicle sales forecasts for the United States down from 16.3 million units to 15.2 million units and has decreased its projection for Europe from 13 million to 12.5 million units.
The impact of US tariffs on China's auto exports is deemed limited, and multinational automakers are noted to be enhancing their production capabilities within China.
This assessment arrives in the context of US-imposed tariffs, which include a 25 percent tax on imported passenger vehicles and certain automobile parts, intended to bolster domestic manufacturing in the United States.
Wang Ying, the managing director of Asia-Pacific corporate ratings at Fitch, highlighted that many multinational and joint-venture automakers are focusing investments on new-energy vehicle (NEV) products aimed at the domestic Chinese market.
These investments are encouraging some companies to shift parts of their supply chains to China as they adapt to the evolving market conditions, including government policies and consumer preferences.
Wang also pointed to an increase in collaborative efforts between international manufacturers and Chinese partners, spanning research and development (R&D) and production within the NEV segment.
Such partnerships are projected to further enhance production capabilities in China, aligning with global trends toward localization in response to market dynamics.
Martin Hofmann, chairperson of the German Chamber of Commerce in China and executive vice president at Volkswagen, referred to this trend as "localization 3.0," emphasizing the shift towards R&D collaborations in the automotive industry across Europe.
In a recent development, General Motors announced it would cease exporting vehicles made in the U.S. to China, reflecting a strategic restructuring of its operations in the region.
GM confirmed its continued commitment to enhancing its core business and joint ventures in China to ensure sustainable profitability.
Porsche also disclosed that its R&D center in China had undergone strategic adjustments that unified its three major R&D entities in the country, marking a significant step in its localization efforts.
Forecasts from Fitch Ratings indicate that the retail sales growth in the Chinese automotive market will remain modest within a single-digit range by 2025. Conversely, the NEV sector is expected to sustain double-digit growth, with its share of overall vehicle sales projected to surpass 50 percent within the year.
In contrast, Fitch Ratings has adjusted its outlook for the global automotive industry from "neutral" to "deteriorating" due to the potential effects of U.S. tariffs, predicting that global automakers may face increased production costs and may need to raise prices accordingly.
The agency has revised its vehicle sales forecasts for the United States down from 16.3 million units to 15.2 million units and has decreased its projection for Europe from 13 million to 12.5 million units.
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