All eyes on China
Media days at the Paris auto show last week were a grim reminder of the challenges that confront the European auto industry. The weak economy, sagging sales, excess capacity and mounting financial losses mean serious trouble, perhaps even bankruptcy for several automakers.
But the worsening situation in China threatens to eclipse the European meltdown as a major headache for the global industry. The Chinese new-vehicle market has softened. Several smaller Chinese automakers seem under stress and likely to fail. Chinese citizens have attacked and burned Japanese brand vehicles, dealerships and factories, forcing them to curtail normal operations.
Now the United States and China have traded grievances at the World Trade Organization.
As bad as Europe seems, automakers ignore the growing problems in China at their own peril.