Further, analysts with Barclays Capital say there are signs of strength in Chinese auto sales.
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But without the appropriate strategies, the pain in the Chinese auto industry can be very high.
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Battery-maker A123 Systems, desperate for money, fell into the hands of a Chinese auto supplier.
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It filed for bankruptcy in October and its automotive assets have been sold to a Chinese auto-parts firm.
That will limit competition, helping BYD and other small, hungry Chinese auto firms like Geely, Shuanghuan and Chery.
According to knowledgeable Chinese auto industry sources, Tengzhong was a classic case of a company being its own worst enemy.
The current growth of Chinese auto market will be stymied in 2011, due largely to the removal of subsidies on small-engine cars.
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In the vast and booming Chinese auto market now dominated by foreigners, a small Chinese company called BYD Auto is barely noticeable.
Power, the recent slowdown in Chinese auto sales has revealed the intensity of demand for international brands as opposed to Chinese brands.
The measures protects Brazilian auto parts makers and could anger Korean and Chinese auto makers who export auto parts and full vehicles to Brazil.
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After its bankruptcy sale to Chinese auto supplier Wanxiang Group, battery-maker A123 Systems Inc. was required to change its name as part of its agreement.
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GM, twenty years ago, formed joint ventures with Chinese auto makers.
Chinese auto sales -- which surged to 35% in 2010 -- showed signs of cooling in the first quarter of this year with just 2% growth.
And the opportunity for Nexteer to penetrate the Chinese auto market, soon to be the world's largest, was a major selling point for GM, this person said.
The growth of the Chinese auto industry has been under pressure in recent month compared to last year when Beijing boosted demand with tax cuts and subsidies.
Most recently, lawmakers are expressing concern about the potential acquisition of A123 Systems, Inc. (OTC Markets:AONEQ) by Wanxiang, a large, privately owned Chinese auto parts maker.
Going forward, we believe that growth in the Chinese auto market will remain bumpy until the government renews its stimulus program in light of worrying global economic environment after reigning in inflation.
"Maybe all we need to know is that Chinese auto sales are rising nearly 20% per year and that they are buying more SUVs and luxury cars as they prosper, " Yardeni says.
Although the demand is huge, local firms don't always meet that demand in the most efficient way, and produce too many models that aren't quite right for Chinese auto consumers while being costly to manufacture.
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Consider what will happen to sales of those big, profitable SUVs in the United States, for instance, if Chinese auto sales, currently at about four million units, hit ten million as expected, driving up oil prices even higher.
After tasting success in the Chinese auto market, General Motors and its Chinese partner SAIC Motor Corp now plan to turn around the fortunes of its Indian unit, General Motors India, in which the Chinese auto maker has a 50% stake.
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The goal of the Chinese government and auto industry leaders is to make China a leader in innovation by 2020.
At the Detroit auto show, a Chinese automaker will debut several new models, and the growing muscle of China's auto industry and rising gas prices are hastening the arrival of Chinese cars on American roads.
Saab Automobile's former owner filed suit against GM, claiming the U.S. car giant blocked a proposed bailout of the Swedish auto maker by a Chinese firm.
Now that the U.S. auto industry has bounced back from its lows, expect to see an increase in acquisitions of U.S. auto parts makers by Chinese companies seeking to gain access to technology and international markets.
There was a rumour, later denied that Great Wall Motor (also Chinese) was also talking to Swedish Auto about investing.
But now, rising Chinese wages are creating opportunity for people from Bangladesh to Indonesia, and even Mexico and Honduras as they start to fill in the ranks of garment workers left vacant by Chinese people becoming service workers, such as auto mechanics, auto part sellers and car salesmen.
Hence, MII will certainly lobby China Mobile, China Unicom and China Telecom (the three Chinese mobile carriers) to push handset suppliers like Lenovo and Huawei (plus other OEMs for new tablets, auto apps, TV set-top boxes) to adopt new Chinese mobile platforms.
Turning again to overseas trading, in a sign of continuing investor worries about Chinese shares following a spate of of governance problems, China Auto Rental reportedly announced yesterday that it would postpone a planned U.S. offering on due to pricing issues.
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"Noble and CEO cars, approved by the Chinese government, are legal products, " a spokesman for Shuanghuan Auto said.
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