Every year the Chinese auto consumer helps determine the future of the auto industry.

America to become more like China

The most important auto market in the world

For the first 6 months of this year, more cars were sold in China than in America, yet the potential of the Chinese market has barely been tapped. Thus, automakers are quickly pouring resources into China in a race that won’t just affect China, but almost certainly the entire world.

For instance, Ford has just opened a $300 million plant in China.

Likewise the biggest automaker in China, GM, has just opened the China Advanced Technical Center that will include “nine research labs and 62 test labs for work on new propulsion systems, petroleum alternatives, electrification systems and new engines and battery cells.

“Clearly the growth of China as the most important growth market in the world means that we’re going to be putting more of our resources in advanced technology and research here,” GM China President Kevin Wale said.

As a result new partnerships between Big 3 automakers and Chinese auto companies and suppliers are rapidly growing, decreasing the knowledge gap between the US auto industry and the Chinese auto industry. Consequently, while the US government and the likes of the UAW can exert pressure on companies like GM to keep certain types of manufacturing in the US, eventually GM’s partners will no longer need GM as much, and they’ll be very interested in also selling purely Chinese vehicles in America.

One way or another the competition in the auto industry is going to increase dramatically in the next few decades, and US automakers will have to be much smarter than they have been the last few decades. Certainly things look better since bankruptcy, but the real game hasn’t even begun.