US Automaker Panic Button Looms After China's Top Carmaker Warns Of "Grim" Outlook

Tyler Durden's picture

Just two weeks ago we explained in a few simple charts why US auotmakers have a major problem looming over them. Today, as Reuters reports, that "if we build them, they will come" strategy has imploded as China's largest automaker warns "the domestic market situation in the second half of the year remains grim." With Q2 US GDP driven by a massive inventory surge, and the majority of that from autos, any hope for a sales rebirth to burn through that over-burden is a long-lost dream now as SAIC sees little to no growth over 2014.

As we previously noted, Automakers just unleashed a massive production surge to keep the dream alive...


With inventories at record highs (having risen for 61 straight months)...


Which would be fine if sales were keeping up - but they are not...


And now the subprime auto loan market is set to collapse... And further, exactly as we warned, the region where sales were supposed to soar is collapsing... As Reuters reports,

China's largest automaker SAIC Motor Corp Ltd warned on Thursday of a grim outlook for the overall vehicle market in the second half of the year, as the slowest economic growth in 25 years and a downturn in the stock market puts off buyers.


Vehicle sales in China, the world's largest car market, rose a meagre 0.4 percent in the first seven months and are predicted to grow 3 percent this year, less than half the 2014 growth rate, the China Association of Automobile Manufacturers said.


The forecast by SAIC, which has joint ventures with Volkswagen AG and General Motors Co in addition to making its own brand of vehicles, follows similar warnings of a slowdown in sales from several automakers.


"In the short term, although the domestic market situation in the second half of the year remains grim, following the macro economy's stabilized recovery, there are still structural growth opportunities," the company said in its earnings statement.


SAIC forecast overall sales of passenger and commercial vehicles in China to total 24.1 million this year, a slight increase from 2014. It did not elaborate.

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We're gonna need a bigger bailout...

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goldhedge's picture

They must be trading in for a Tesla instead?



Richard Chesler's picture

Remember this, the next leg down starts once Gartman turns bullish.


Seua's picture

I thought that insurance companies bought all excess inventory after Tianjin.

Antifaschistische's picture

I've been to China many times...many friends and associates there.  Driving in a large city in China is a complete pain in the ass.  Parking is a pain in the ass....everything about car ownership is a pain in the ass.   But....they still wanted a "car" because it was just such a cool thing to have.   I always felt like everything else that's "cool to have".  That wears off.  I always long is it going to be before many (not all) but many people recognize that it was more convenient using the bus or subway?  Or uber if they'd allow it.   Maybe I'm wrong...but taxi's are cheap in China and way more convenient than driving.  Here's to you Mr. Auto Maker...

El Oregonian's picture

I guess it's back to the ol' trusty Rickshaws for them....

goldhedge's picture

Its Bicycles.  Rickshaws are so Imperialist.

junction's picture

Obama: "Tough luck for the stock market.  Who cares?  Next time, Reggie, get better blow.  This batch is subpar."  Snort! Snort!

AE911Truth's picture

Hey carmakers out there! I need a new car but none of you make a car with the features I want!

I want a car that does not consume any fuel, like the Stan Meyer type of car. Or an electric car that charges itself with an AuroraTek type generator.

Haven't you heard, we need to stop burning fossil fuel. So, make a car that does not consume fuel.

I am not buying another car until you produce a car that does not consume any fuel.

Colonel Klink's picture

Tick tock you executive scumbags.

Chuck Knoblauch's picture

Ford's new model is called the GRIM.

Comes without airbags and seatbelts.

Cost cuts.

willwork4food's picture

and brakes are manual, but it does come with a cig litter & a pack of B&H's.

Falling Down's picture

China just needs a Cash4Clunkers program.

There, fixed it.

Ms No's picture

This one of many examples of why we are screwed, everything is converging.  You could list the reasons all day; treasuries, shale scam, Greece, Puerto Rico, housing bubble, coal smash, student loan bubble, real unemployment rates......

xcehn's picture

FEMA can't prepare fast enough.

Ralph Spoilsport's picture

See all those rows of burned up cars sitting around near the crater in Tianjin? Just keep phoning in those port coordinates to the Rod of God control center and problem solved in a jiff. Veterans Today thinks Tianjin was another mini-nuke but they're weird like that.

junction's picture

If Obama has access to the equivalent of a neutron bomb, we are all fucked.

SantaClaws's picture

Let's hope Veterans Today is simply weird.  But I suspect increasingly that they are right and what's right is weird and disturbing.  Their recent 911 article is a good example. (Geo. Washington Bridge and Holland and Lincoln Tunnels were also targets on 911).

Ralph Spoilsport's picture

I still haven't figured out VT. Gordon Duff likes to hear himself talk and claims to be everything from a gourmet chef to the CEO of a company that does defense and surveillance work. Duffs' writing is amateurish and full of spelling and grammatical errors. Jim Dean seems a lot more level headed but doesn't claim to have any intelligence or military experience.  Some of their articles are way way out there and some of them seem to be very close to containing classified material about nuclear weapons design. Interesting reading at times but not an impeachable source by any means.

Implied Violins's picture

Here's some interesting stuff on Gordon Duff:

And then there is this - Jim Fetzer and Kevin Barrett left VT to start their own new website:

- and they linked to the above two articles by Ken partly to explain why. So there is some shady stuff going on somewhere there, and possibly all the way around.

SantaClaws's picture

Good research.  Time to forget about Duff and VT.

eeaton's picture

When I take the Long Island Rail Road to Manhattan I pass dozens of lots along the way filled with new cars. Belmont race track with massive parking lots is full of new cars must be thousands. This pile of new cars is all within the last 6 months.

Freddie's picture

What kind of cars?  I swear that chrysler/Dodge has been doing that for 10 to 15 years.  They make total shit but so does GM-UAW-Obama. 

Just churn the shit out cause the union is running the shop. Taxpayers will pay for all of it.  Don't worry about supply and demand.  The USSA is lik ethe old USSR with the same dual shit-i-zen types in charge like the USSR.

Cabreado's picture

Convoluted article.

Phillyguy's picture

It appears the situation in China mirrors what is going on the US. As repeatedly pointed out on ZH, US auto sales have been propped up with sub-prime auto loans. Economic growth is entirely dependent on the purchasing power of working people. Obviously, one cannot have economic growth when wages for working people are stagnant or declining- 90% of “new” jobs in US are temp positions- read low pay, no benefits, no job security. How is a person working at Walmart going to afford a new car? The answer- bring on subprime auto loans.

ali-ali-al-qomfri's picture

just got off the phone with the dealer, and boy did I give them a piece of my mind.

I had management so flustered and befudled that they promised to upgrade my paint scheme from Frost White to Flaming Orange and Black, he said they upgraded my paint option to a very unique color called ; Tianjin Singe. Supposedly its good luck in Chinese.

ya gotta know how to hanlde these dealers, I tell ya. 



New_Meat's picture

duuude, ya gotta' b careful with dem pieces of ur mind.  Not so many as we might 'a wished these dayz, don't cha' know.

- Ned


I'll take a new GMC for FREE if they are giving them away or Alan Greenspan advises them to burn the overstock.

arrowrod's picture

A Chinese company reported something.  I'm supposed to decipher the lie into something meaningful.

You ZHers are way smarter than me, I got nothing.

AE911Truth's picture

When the car makers produce something worth buying, I will buy; until then, I'll just wait.



Teh Finn's picture
Teh Finn (not verified) Aug 27, 2015 8:59 PM

Cash for Clunkers II: Redux Boogaloo

Jack Daniels Esq's picture

USG is America's #1 enemy - impeach 535 + ICiC for treason, fraud

Last of the Middle Class's picture

Soft landing anyone. . . anyone. . . Bueller?