Buick’s lovely GL8 minivan on stage in Shanghai this year. Photo: Raphael Orlove
Buick’s lovely GL8 minivan on stage in Shanghai this year. Photo: Raphael Orlove
The Morning ShiftAll your daily car news in one convenient place. Isn't your time more important?

In January of this year, every automaker in the world opened up the newspaper and saw something it never wanted to see: China’s car market down, for the first time in 20 years. As we round out the year, things may have gotten worse. All that and more in The Morning Shift for Tuesday, December 10, 2019.


1st Gear: China’s Car Market To Slump For The Second Year In A Row

The official year-end numbers are not yet in, but they don’t look good, as Bloomberg reports:

Car sales in China continued to decline in November, extending a historic slump and all but ensuring a second straight annual drop for the world’s biggest auto market.

Sales of sedans, sport utility vehicles, minivans and multipurpose vehicles fell 4.2 percent from a year earlier to 1.97 million units, the China Passenger Car Association said Monday.

The decline was the 17th in the past 18 months, with the only increase coming this June as dealers offered large discounts to clear inventory.

The root cause of the slump is not just Trump’s trade war on its own. There’s a bit of a bigger atmosphere of uncertainty, as the South China Morning Post notes:

“The market failed to live up to expectations of a strong rebound in November,” said Cui Dongshu, secretary general of the [China Passenger Car Association]. “Consumer demand remained weak as people are reluctant to spend on big-ticket items due to worries about a bleak economic outlook.”


Suzuki has already jumped ship from the Chinese car market, PSA sub-brand DS may soon depart as well, and shit just does not look like it’s going to be easy anytime soon.

2nd Gear: EVs, Too

The fate of EVs in China is a bit more complicated, as it relies heavily on government subsidies. Big ones.


And while China is probably the leader in actually bringing affordable EVs to market, it hasn’t been the fastest-growing in sales, as the Associated Press notes:

In November, purchases of electric and gasoline-electric hybrid SUVs and sedans tumbled 43.7% from a year earlier to 95,000, according to the China Association of Automobile Manufacturers. Sales for the first 11 months of the year were up 1.3% at just over 1 million vehicles.

China accounts for half of electric vehicle sales worldwide, making any change in its market critical for the global industry.

Worldwide, EV sales were up 13% over a year earlier in the 10 months through October at 1.7 million, according to Bernstein Research. Sales in North America were off 2% at 301,000 while Europe rose 37% to 395,000.


Who is buying EVs in China? People with strong government pressure to do so, as the AP continues:

In China, about 70% of the 1.2 million electric or gasoline-electric hybrid models sold over the past year went to government and company fleets, according to Bernstein. Almost 500,000 bought by consumers were in cities that offer incentives such as being exempt from registration fees or license plate waiting lists.

“Few real consumers buy EVs except when forced by regulations,” Bernstein researchers Robin Zhu, Luke Hong and Xuan Ji said in a report.


Bloomberg, at least, is positive that while 2019 may not be ending on a high note, 2020 could be worse:

Still, electric car sales in China are forecast to rebound next year, according to BloombergNEF research. For the first nine months of 2020, it predicts sales of 912,000 electric vehicles, a 13 percent increase from the year-earlier period.

“Potential cuts to subsidies at the beginning of 2020 are keeping the industry in limbo,” according to the report. “A shrinking market could force the government to give up its plans on cuts.”


I would not want to be a carmaker relying on that kind of positive thinking, if it were me. Indeed, shit does not look good for BYD, which reported “an 89 percent decline in third-quarter earnings,” as Bloomberg notes, nor do things look good for the struggling NIO.

3rd Gear: GM Puts Another $40M To Its Good Friend In The EV Truck Industry

I remain somewhat perplexed how GM is getting away with the whole Lordstown Motors thing. GM has basically given over a chunk of its business to a company with little history to speak of, and everyone is taking it as normal.


As such, GM has put another $40 million into Lordstown, to which it has already basically given an entire plant to crudely EV-ify some pickup trucks. The Detroit News reports on how this is all going down:

General Motors Co. sold its sprawling Lordstown, Ohio complex for $20 million — but it plans to cut the buyer a $40 million loan to help it launch its first product.

Lordstown Motors Corp., the start-up that swooped in to buy the Lordstown plant GM effectively idled in 2019, bought the plant in early November. Neither company offered details of the sale, which allows Lordstown Motors to establish its headquarters at the plant and build an electric pickup truck there.


The details of the whole affair get a bit more convoluted from there, as Lordstown is part of an ownership structure that also includes another company, Workhorse, and is part of GM’s totally-not-thrown-together EV plan that also includes developing an all-electric truck of its own for 2021.

4th Gear: Meanwhile, EU Puts €3 Billion Into Battery Dev To Maybe Help Car Companies

What the EU is, exactly, is a bit more political than it might want you to think at any given time. As such, look at this the Financial Times report on a new pan-European alliance to support battery development that sure seems to be coming from countries that make cars and need help making batteries for their new cars:

Seven EU countries — Belgium, Finland, France, Germany, Italy, Poland and Sweden — will provide funding of up to €3.2bn for the project, set to be completed by 2031. The European Commission said it expected a further €5bn in private investment.


Peter Altmaier, Germany’s economic affairs minister, called it “a big success for Germany and Europe as a destination for investments in the auto industry”.


Chemicals group BASF will contribute battery materials. BMW will be involved in developing the chemical composition, cell mechanism, cell designs and the production process. Carmaker Opel will set up a joint venture with its French parent PSA and the French battery producer Saft to produce innovative battery cells in Kaiserslautern in south-west Germany. The plan is for Germany to produce battery cells on an industrial scale by the mid-2020s at the latest.


I very much enjoy how this report slowly devolves into other countries mostly just helping BMW and the German auto industry get back at Tesla, or whatever.

5th Gear: It Was All For This?

Yesterday we noted that the big fine has rolled in to Nissan over misstating Carlos Ghosn’s pay, at a scant $22 million. For a company as big as Nissan, that seems more than a little trifling, but the Financial Times has a bit more context on it:

The fine recommended by the SESC is the second biggest penalty for a Japanese company for falsified financial documents after a ¥7.4bn fine levied on Toshiba in the wake of its $1.3bn accounting scandal in 2015.

The amount sought is half the original fine because Nissan notified regulators about the understated pay before the SESC launched a formal probe. The final decision on the fine will be made by the overarching Financial Services Agency.


Still, for a company that expects to make over a billion dollars in profit this year (and that’s a shockingly low number for Nissan), it still rings weak. Nissan nearly self-destructed over this? A measly $22 million?

Reverse: It’s Been Downhill From There


Neutral: If Not China, Where?

Car companies exist on telling the world that cars are still going strong! That we all love cars! That they’re definitely not something that we should drastically reduce our dependence on! But if it’s going to have a hard time hyping up China as a never-ending boom town, what else does it have?

Raphael Orlove is features editor for Jalopnik.

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