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U.S.-initiated trade tensions pose significant downside risk for automotive industry

(Xinhua)    16:14, June 27, 2019

BERLIN, June 27 (Xinhua) -- "The year 2019 will be more stressful for the global automotive industry than during the global financial crisis in 2009," said Ferdinand Dudenhoeffer, director of the German CAR Institute, expressing worries about the impact on the car industry by the trade tensions created by Washington.

Global sales of new cars are expected to decrease from 83.7 million in 2018 to approximately 79.5 million in 2019, according to a recent study by the CAR Institute.

The study received by Xinhua showed that global sales of new cars had already fallen by 1.1 million in 2018, marking the first decline in eight years.

One of the main reasons for the strongest global decline in new car sales in more than 20 years would be the "large uncertainties due to tariff wars and sanctions imposed by the U.S. government under President Donald Trump," Dudenhoeffer said.

The U.S. government suggested earlier this year that European autos, especially German autos, are a threat to U.S. national security. The Trump administration has threatened to impose a 25 percent tariff on auto parts and cars imported to America.

According to some car experts, the economic uncertainty arising from the U.S. tariff threats is very worrying. There are widespread discussions about the huge negative impact on European cars if Washington decides to carry out its tariff threats.

The ongoing international trade conflicts and the weakness of world trade are weighing particularly heavily on Germany's internationally oriented manufacturing sector, said Oliver Holtemoeller, vice president of the Halle Institute for Economic Research in Berlin.

In Germany, where the car industry is the backbone of the economy, almost all big brands witnessed year-on-year global sales losses in the first five months of 2019.

Germany's largest carmaker Volkswagen recorded a global delivery decline of 5 percent in the first five month of 2019, while Mercedes-Benz recorded a year-on-year decline of 4.7 percent in the period.

Meanwhile, the Ingolstadt-based Audi AG also reported that its sales worldwide experienced a year-on-year decline of 5.8 percent in the first five months of 2019. In the European and U.S. markets, the sales went down by 4.8 percent and 7.3 percent respectively.

According to official figures, the Munich-based BMW Group also recorded sales declines of 1.6 percent and 2.2 percent respectively in the European and U.S. markets from January to May 2019.

Both spokespersons of BMW Group and Audi AG told Xinhua that it is free trade that made their successes and they are calling for free and fair trade relations.

"We are not interested in further escalating the trade conflicts between the U.S. and China," said a BMW spokesperson.

A spokesman of Volkswagen said recently that the trade frictions between China and the United States have yet to exert a direct impact on its supply chain, but they do affect the industry climate for consumers.

If the U.S. president realizes his latest threat to impose further punitive tariffs on more than 300 billion U.S. dollars' worth of U.S. imports from China, there is a danger of a global car crisis, Dudenhoeffer said.

Zhang Ming, Chinese ambassador to the European Union (EU), said while the steel and aluminum issue is pending, the auto tariff is like a sword hanging over Europeans' heads.

"China is not the only victim. The stick of tariffs has been wielded at many, including the EU," Zhang said in a recent speech at a luncheon hosted by the EU-China Business Association.

"With the doctrine of 'America First,' it seems that any country and any sector could become an easy target at any time," he added.

The ambassador noted the world at this moment could not be more uncertain. "Nobody likes uncertainties. Given that, it is even more important for China and the EU to join forces to counter unilateralism and protectionism with the stability of their cooperation," he said. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: He Zhuoyan, Bianji)

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