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American Cars Lose Shine in China as Trade Tensions Simmer

© Bloomberg. A Ford dealership in Shanghai. © Bloomberg. A Ford dealership in Shanghai.

(Bloomberg) -- As China’s car market cools, American manufacturers are among those getting hurt the most.

The market share of U.S. brands fell to 9.6% in the first five months of 2019 from 10.9% a year earlier, the state-backed China Association of Automobile Manufacturers said Wednesday. German and Japanese brands, meanwhile, gained share in the world’s largest car market.

The decline suggests U.S. marques have lost some of their competitiveness as trade tensions between the world’s two economies simmer. Ford (NYSE:F), General Motors (NYSE:GM) and Fiat Chrysler Automobiles (NYSE:FCAU) have their work cut out for them as Japanese competitors and European giants seek to take advantage of any weakness in the U.S. companies’ brand image.

GM’s Buick and Chevrolet were among the American brands that saw sales fall this year through April, according to LMC Automotive. Mercedes-Benz, BMW, Honda and Toyota were among brands who boosted sales, according to the researcher.As a whole, the industry faces a common problem: a shrinking market. After soaring for the past three decades, car sales in China have fallen for a year after the government cut excess industrial capacity, tightened environmental norms and cracked down on peer-to-peer lending. The rising popularity and availability of car-sharing and ride-hailing services is also reducing the need for individuals to buy vehicles.

As the U.S. and China continued to negotiate toward a trade deal, China in April extended a suspension on retaliatory tariffs on U.S. autos. For now, the duty on cars brought from the U.S. is 15%, same as for other auto imports, though if China ends the suspension the duty could again increase to 40%.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen, Jeff Sutherland

©2019 Bloomberg L.P.

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