The year 2018 had been hard on auto makers and 2019 seems no good so far. According to a data published on Monday, the deceleration that hit China, which is the world’s largest car market, has worsened. The US is thinking of forcing taxes on imported cars, which would seriously affect the global brands badly.
The passenger car sales of China had seen a huge drop the previous year. In January, there was a drop of 18%, according to China’s Association of Automobile Manufacturers. The auto market is finding it hard to make a comeback in spite of its drop spanning the seventh month now. For the first time in 20 years, 2018 saw a decline in the annual car sales.
Tension in trade relations with the US and removal of Chinese subsidies has added fuel to the flames. As a result of this, some of the famous automakers have landed in great trouble. GM said that their sales dropped by 10% last year compared to that in 2017. In order to turnaround the situation, they are bringing up 20 new models in China and are shifting their attention to electric vehicles. The Volkswagen which had reported record sales in 2018 had dropped by 3% in January.
As a result of the new US tariffs, the German manufacturers would be the most affected. An investigation has been done to find the threats caused by imports of cars and car parts on US national security. The results of the same have been handed over to President Donald Trump by Commerce Secretary, Wilbur Rose. If he decides to impose 25% tariffs on imported vehicles, then experts feel that the companies in Europe will have to bear the hard consequences of it.
The Munich based lfo Institute for Economic Research said that such high tariffs would cause the German auto exports in the country to fall by 50% within a decade. Experts also warn that this situation will in turn be hitting back the US car industry, as they rely mainly on imported components. The worst case will see a loss of many auto jobs and people finding hard to cope with the eventual price rises in the country.