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US Automaker Panic Button Looms After China's Top Carmaker Warns Of "Grim" Outlook

Just two weeks ago we explained in a few simple charts why US auotmakers have a major problem looming over them. Today, as Reuters reports, that "if we build them, they will come" strategy has imploded as China's largest automaker warns "the domestic market situation in the second half of the year remains grim." With Q2 US GDP driven by a massive inventory surge, and the majority of that from autos, any hope for a sales rebirth to burn through that over-burden is a long-lost dream now as SAIC sees little to no growth over 2014.

As we previously noted, Automakers just unleashed a massive production surge to keep the dream alive...

 

With inventories at record highs (having risen for 61 straight months)...

 

Which would be fine if sales were keeping up - but they are not...

 

And now the subprime auto loan market is set to collapse... And further, exactly as we warned, the region where sales were supposed to soar is collapsing... As Reuters reports,

China's largest automaker SAIC Motor Corp Ltd warned on Thursday of a grim outlook for the overall vehicle market in the second half of the year, as the slowest economic growth in 25 years and a downturn in the stock market puts off buyers.

 

Vehicle sales in China, the world's largest car market, rose a meagre 0.4 percent in the first seven months and are predicted to grow 3 percent this year, less than half the 2014 growth rate, the China Association of Automobile Manufacturers said.

 

The forecast by SAIC, which has joint ventures with Volkswagen AG and General Motors Co in addition to making its own brand of vehicles, follows similar warnings of a slowdown in sales from several automakers.

 

"In the short term, although the domestic market situation in the second half of the year remains grim, following the macro economy's stabilized recovery, there are still structural growth opportunities," the company said in its earnings statement.

 

SAIC forecast overall sales of passenger and commercial vehicles in China to total 24.1 million this year, a slight increase from 2014. It did not elaborate.

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We're gonna need a bigger bailout...