News / Economy

US Automakers Fear Sales Gains May be Hurt By Drop in Global Demand

Scene inside US auto factory (file photo)
Scene inside US auto factory (file photo)

Multimedia

Earnings reports from the big three U.S. automakers show 2011 is off to a good start.

Domestic sales were up 18 percent in January, signaling improved consumer demand in the U.S.  But with automakers becoming increasingly dependent on foreign sales to boost profits, there is growing concern that demand may be cooling off in rapidly growing economies such as China.

General Motors is up 22 percent.  Ford Motors gained 13 percent, and Chrysler jumped 23 percent -- ahead of its initial public offering later this year.

After a tough recession that nearly wiped out GM and Chrysler, Jeremy Anwyl at Edmunds.com says the three U.S. automakers have come back stronger.

"They've gotten their structural costs down.  They are able to make money at much, much lower sales volumes and really the key, I think, is to keep marketing costs, incentive costs in line, not to get too far ahead of the consumer in terms of where the demand is," he said.

But even with improved domestic sales, the continued profitability of U.S. automakers is increasingly dependent on foreign markets.

Last year, General Motors sold nearly 2.5 million cars and trucks in China, more than it sold in the U.S., a first in the company's 100 year history.  

Ford, which sold nearly 600,000 cars in China last year, is playing catch-up. "China is a fantastically big market and growing. You consider that there's 1.3 billion people in China. We're estimating a market of around 14 million cars a year. There's a burgeoning market here for small cars," said J. Mays, Ford's vice president of design.

But the rapid growth in emerging markets may be cooling off.

With Chinese roadways absorbing about 2,000 new vehicles each day, Beijing has begun setting limits on new car registrations to reduce traffic congestion.  

Such curbs could reduce the bottom line for carmakers. But Beijing auto dealer Su Qing says so far, the restrictions have had little effect.

"This month's car sales have increased very fast.  The cars have basically sold out.  It's very possible that there will be new policies restricting car licenses, but I don't think that these new policies will have a big impact on car sales because these cars are a family necessity," Qing said.

After growing more than 30 percent last year to become the world's biggest auto market, Chinese sales are expected to moderate in 2011.  U.S. automakers are confident American cars will continue to make inroads.  

But industry analysts say a more pressing concern right now is rising oil prices - which could crimp global demand and push consumers into buying smaller, less profitable vehicles.

You May Like

Bleak China Economic Outlook Rattles Markets

Several key European stock indexes were down up to three percent, while US market indexes were off around 2.5 percent in afternoon trading More

DRC Tries Mega-Farms to Feed Population

Park at Boukanga Lonzo currently has 5,000 hectares under cultivation, crops stretching as far as eye can see, and is start of ambitious large-scale agriculture plan More

Video War, Drought Threaten Iraq's Marshlands

Areas are spawning ground for Gulf fisheries, a resting place for migrating wildfowl, source of livelihood for fishermen and herders who have called the marshes home for generations More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs

World Currencies

EUR
USD
0.8916
JPY
USD
121.32
GBP
USD
0.6487
CAD
USD
1.3252
INR
USD
66.401

Rates may not be current.