China's Oversaturation

Podcast Episode: 0097
China's Oversaturated Automotive Market

    China has been on a bender lately, producing more and more new automotive companies every month.  Seems, their growth is similar to that of the early 20th century in Europe and America.  But, like their counterparts, can this explosion eventually hit the breaking point.  AutoLooks takes notice of this and goes through how the Chinese 

​Automotive bubble may be about to burst.  So, follow us on our podcast ride and learn something about how China's automotive industry  may be too oversaturated for their own good.

    
      The Chinese Automotive Market has been on a roll lately, with new companies popping up on a monthly basis.  Some are new and some are just another division which has been added from an established automaker.  But all in all, this market has seen substantial growth over the past two (2) decades.  So, when will this bubble burst and their market starts to make its way in line with the rest of the worlds.   

    As the Chinese market has been on an upswing now for over twenty (20) years, its no wonder that their are more and more companies being added to every market.  This is similar to the American marketplace at the beginning of the twentieth (20th) century.  During the decades of 1910 and the 1920's, their market blew up, with more and more new companies entering this growing marketplace.  But a depression in the 1930's and war in the 1940's, most of the little makes couldn't make it.  And by the 1960's, most of the smaller automotive companies had begun the fall.

     Not every marketplace had this happen, but most around the world went through a tough time between the 1960's and 1970's.  By this time the market had reached maturity and with growth starting to taper off, the smaller less efficient began to die off, one by one.

    As the Chinese market hasn't reached their breaking point as of yet, new companies can still come in and gain traction in a growing marketplace.  But all of this could change over the next two (2) decades, as this market is already ahead of the rest of the world in switching over to their EV power source.  And if time tells us anything, its that if your ahead of the curve, then you will be the first to see the repercussions when the market has hits is near peak.

    So, in the end, the Chinese marketplace will eventually be the first market to be slowed when the changeover to a new power source has been finalized.  Their market will be hit before everywhere else as their market will eventually reach its saturation point.  The only way out is to slow their growth of new companies and start to focus on core markets.  Because as General Motors, Ford and Chrysler have taught us anything, its that having too many baskets to focus on, spreads your resources thin when the time to change comes into effect.

    So, slow the growth of multiple divisions now, so that you can handle the saturation point better, when it arrives.

Everett J.
​#autolooks, @Autolooks.net