China’s Auto Sales

Week 3 Assignment derives from Chapter 3.  Read the following information and using Chapter 3 resources, construct an “Issues Paper” based on the information below.  An Issues Paper identifies all issues and how you propose to resolve those issues.  For example, what can America do to revive our automobile industry?  What has NAFTA done to hurt/help America?  The choice is yours with this paper but the key and part of your grade comes from your ability to propose questions to issues that you find and how you would resolve all issues.   Construct your document in Microsoft Word, name as BU 100 Week 3 Assignment, and submit here.  Always head your paper with the title it has within.  Place your name and week on each assignment.   This assignment has a point value of 40, should be 1.5 pages in length and is due by 11:59 p.m. at the end of Week 3.     *Submit your saved BU 100 Week 3 Assignment Word Doc in the submission block below.   CHINA BESTS THE UNITED STATES IN AUTO SALES   Over the last 25 years, China has become an undisputed financial powerhouse. In 2009 it overtook Germany as the world’s largest exporter, and in 2011 it is predicted to surpass Japan as the world’s second largest economy. As China’s economic clout has increased, so has its growing population of middle-class urbanites’ demand for Western goods. Recently experts even went so far as to predict that this demand could result in China topping the United States in auto sales by 2020. As it turns out, the experts were right, only they underestimated the date by about a decade. In 2009 total vehicle sales in China topped out at an estimated 13.6 million, compared to 10.4 mil-lion for the United States. This event marks the first time in history that another nation has surpassed the United States in auto sales and effectively crowns China as the world’s largest auto market. Several factors spurred China’s 45% jump in auto sales. For one, China’s $586 billion government stimulus package helped the economy grow by more than 8% even as the rest of the world floundered in recession. Next, government officials slashed taxes for smaller, fuel-efficient cars while also granting $730 million in subsidies for purchasers of SUVs, trucks, and vans. By all ac-counts the Chinese government is planning to keep the auto market stimulated by keeping taxes low and granting further subsidies. Despite America’s 21% plunge in 2009 auto sales, Chinese demand for vehicles has nevertheless become a major boon for American auto companies. As domestic demand for cars has waned, U.S. companies have found new growth opportunities with the Chinese urban elite. In 2009 GM saw sales in China grow by 67% while Ford sales increased by 44%. American automakers aren’t the only ones benefiting from this surge in Chinese car buying; German car company Volkswagen claimed that China is currently its biggest market as well. Foreign-made cars remain superior in quality and safety than Chinese cars, ensuring that China will continue to be a major market for car manufacturers worldwide. Chinese auto companies are growing, however, with some hoping to break into Western auto markets once they are able to satisfy safety and emissions standards.

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