Ford and GM's Potentially Big China Problem

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes addresses topics from across the investing world.

In today's edition, Brendan discusses problems in  the world's biggest auto market, China. Sales increased in the country in May, but deliveries increased at a higher rate. This shows that automakers are delivering more and more cars to dealerships, but dealership inventories are growing because they can't sell the cars fast enough. This leads to the dealerships offering price cuts and other incentives. Considering that most automakers book sales when they deliver cars to dealerships in China, not when the cars are actually sold, this likely won't be reflected in automakers' China sales numbers for another few months. But this is a big issue to keep an eye on in the world's biggest auto market. Check out the video below to see which automakers could be vulnerable to the China slowdown. 

Ford and GM both have significant exposure to Europe, and GM in particular has used China as a big driver of growth in the past decade. With the Greek debt crisis and slowing growth in China, many investors are worried about problems in these markets going forward. But thanks to a brand-new technology, we can now say that the future is made in America. Domestic manufacturing is poised to once again become the investment driver of the world, and all because of one disruptive technology. You can uncover the three companies that will ignite the next industrial revolution in our analysts' new free report. Just click here to read more.

Brendan Byrnes owns shares of Ford and General Motors. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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