Will US car giants' merger dent China auto industry?

Shanghai, October 15 (Gasgoo.com) The three U.S. car-making giants are now plagued by the pervasive financial crisis. In order to weather the tough days, General Motors and Chrysler LLC are seeking merger, and Ford Motor mulls selling its 33.4-percent stake in Japanese carmaker Mazda Motor for cash.

Auto industry analysts said that the survival measures by three U.S. auto makers, all of them have joint ventures with Chinese carmakers, will not have big impact on China's auto industry in the short term. Their Chinese partners -- SAIC (Shanghai GM), Great Wall Motor (Chrysler's prospective small-car maker), Changan Motor (Changan Ford Mazda) and Jiangling Motors (Ford's commercial car maker in China) – might as well cooperate better with them but are advised to brace themselves up for some big or small test in the long run.

General Motors' joint venture Shanghai GM was one of the top three carmakers in September in terms of sales and has long been China's No. 2 car seller after Volkswagen China (which has FAW-VW and Shanghai VW ventures). SAIC-GM-Wuling, GM's China commercial vehicle joint venture, sold more than 350,000 mini vehicles in the first half of 2008, up 16.5% year on year, and began exporting Chevrolet N200 minivans to Peru in mid-July.

Although Chrysler LLC is quitting Daimler’s Beijing venture -- Beijing Benz-DaimlerChrysler Automotive Co., Ltd. (BBDC), production of Chrysler 300C and Chrysler Sebring models at BBDC will not stop in China for the time being. The two Chrysler models will be produced by BBDC till 2012 and 2013, respectively, as agreed in their earlier contract. And the departure of Chrysler from Daimler as well as the sales of both car models will have no impact on the contract.

Chrysler has had talks with China’s Chery Auto for possible partnership and is developing an A-class car along with Great Wall Motor. Since mid-August, Chrysler has sent dozens of technicians to assist Great Wall Motor in developing the new car model. The A-class car designed with the help of Chrysler is very likely to be branded with the latter's trademark, to be produced by Great Wall Motor and sold around the globe.

Ford Motor China has reported sales of 240,879 units for the first nine months of 2008, up 7% year on year. Ford Motor's passenger car joint-venture, Changan Ford Mazda Automobile, has reported sales of 159,833 units, a year-on-year increase of 6%. Ford Motor's commercial vehicle investment in China, Jiangling Motors, has reported sales of 75,496 units for the first nine months of 2008, up 8% from one year earlier.

If GM and Chrysler are merged, they will likely deliver more OEM projects to their Chinese ventures, and their sales network in China will also be integrated for more cost-effective operations in the Chinese market. Survival efforts made by the three U.S. automakers are expected to pay off, and the U.S. government and the American people are unwilling to see the three giants, as the symbol of American spirit, collapse before their eyes following the Wall Street turmoil.

"A number of factors, both internal and external to China, helped contribute to an overall slowdown in the domestic auto market during the third quarter. While our growth continued in China, we also focused efforts on further improving the class-leading quality, safety and value of our products, as well as our dealer and Ford brand experience for our customers." said Robert Graziano, president and CEO of Ford Motor China.

Earlier this year, the three U.S. car giants said that they have been looking to China's auto industry and the Chinese market for their global growth. The American car companies' presence and confidence in China -- the world's second largest auto market -- will not fade out, as evidenced by Chrysler in its persistent pursuit of cooperation in this fast-growing country.