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China vs US: The world’s largest auto market in terms of manufacturing collisions

The United States is the second largest automaker but is significantly behind China, which produces about 1.5 million passenger cars each year.

Photos are used for representation purposes only.
Photos are used for representation purposes only.

Domestically manufactured cars qualify for some incentives in the United States with President Joe Biden signing into law the Inflation Reduction Act (IRA) recently. While this means that manufacturers with manufacturing facilities in the US will benefit as incentives will make their products more attractive to potential customers, manufacturers without factories in the US will benefit from the incentives. this is likely to miss. And this doesn’t go down too well with some countries where China is the latest to call IRAs ‘discriminatory’.

Many manufacturers are based in China, and units export from here to global markets, sometimes including the US. But an IRA could mean that such manufacturers may increasingly consider relocating facilities to the US to benefit from incentives on their products. According to Bloomberg, China’s Ministry of Commerce has taken a stern stance. “It (IRA) discriminates against similar imported goods and is suspected of violating World Trade Organization guidelines,” said spokesman Shu Jueting. when necessary.”

China and the US are two of the world’s largest auto markets as well as manufacturing hubs. China produces about 1.5 million passenger cars a year while the US produces about half. Most vehicles made in China are for the domestic market, although the share of exports is growing. But while the competition is stiff, the IRA is also not being taken too kindly by South Korea, a key US ally. One senior government official even called it ‘a betrayal.’ (Read more here)

Korean auto giants like Hyundai and Kia do big business in the US but unlike many of their rivals, there are no manufacturing plants there. As a result, there is a concern that Hyundai and Kia models may not be as attractive as other models that enjoy the offer. Last week, the media reported that Hyundai is currently considering setting up a manufacturing facility in the US.

Date of first publication: September 23, 2022, 10:35 AM IST

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