Every car maker in the world looks upon China as a sort of bonanza, a liquid sales goldmine were the taps are overflowing with consumers ready to spend money. But it seems Chinese consumers are no different then Western consumers.
In the past few weeks the Chinese stock market has seen a huge dip in value meaning investors have lost countless billions. It could be the beginning of a stock market collapse.
The origins of the slump sound very familiar, people borrowed money to buy and sell shares however failing prices meant everyone lost out big time.
The cause has been seen many times before but at the end of the day greed is the guiding principle and in this case greed might not be good especially for car makers who have invested hundreds of millions of dollars to setup manufacturing hubs within China.
If people have frittered away borrowed money without a hope of recuperating it then they will have little money to spend elsewhere. The biggest loser could be European car makers.
The recent stock market slump comes on the back of China’s slowing economy and more recently the Chinese government has been cracking down on people who spend big just to be flash.
This is the power of a dictator state in operation in 2015, China will give into consumerism but it will reign in on those who lord it up.
Some BMW dealers were already offering 5 percent discounts and will have to offer more to lure back customers, as much as 15 percent is what customers expect.
Premium car makers seem to be hit the hardest, one Mercedes dealership in China has seen demand drop by around 20-30 percent in the last month alone.
Volume manufacturers such as the Volkswagen Group and General Motors are also adjusting their prices as the stock market volatility slowly sweeps across the country.
Many analysts have long argued that China’s manipulation of its currency and stock market could have long term and damaging effects.
But it seems a combination of the latter and old fashioned consumer greed has also played its part something that is all too familiar in the West.