The Government of the Netherlands has suspended its intervention at Chinese-owned chipmaker Nexperia this week.
The details: For weeks now, a bitter dispute over the semiconductor-maker has had global automakers stressing about supply shortages, underscoring how dependent the auto industry has become on China for critical components.
An analysis by a UN body indicates that China accounts for 27% of global industrial production, according to a report by global insights firm Hogan Lovells — with automotive parts accounting for a significant portion of that production.
Over 30% of automotive parts in five critical commodity categories — including chip resistors, ceramic capacitors, through hole resistors, fixed inductors, and fixed capacitors — pass through China during their manufacturing process, according to Z2Data.
Current projections put China’s global industrial output at 45% by 2030, fueled by continued investment in manufacturing capacity, with the country’s domestic consumption remaining low, per Hogan Lovells.
What they’re saying: “Tensions have been rising for several years between China and the ‘Global West' as anchored by the United States,” notes the Hogan Lovells report. “Any route to untangling those tensions and explaining them will have its weaknesses but the best angle is likely the evolution of what is referred to as the ‘China shock' – the term often used to describe the rapid increase of goods entering world markets after China joined the World Trade Organization in 2001.”
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Why it matters: A healthy auto retail climate depends on steady, affordable vehicle supply — and heavy reliance on China for key parts makes that increasingly fragile as tensions rise. Disruptions, tariffs, or export controls could mean fewer cars on lots, higher prices, and lost sales, while brands that diversify supply chains will better protect inventory and market share.
Between the lines: Tesla and GM (along with other global automakers — to accelerate moves to shift supply chains out of China, even as tensions between The Hague and Beijing appear to be easing.
What they’re saying: "We are positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world," said Vincent Karremans, the Dutch government’s economic affairs minister, in a statement.
Bottom line: With so much of the parts and chip supply running through China, flare-ups in trade or policy can quickly turn into tighter inventory, higher floorplan costs, and more pricing pressure on the showroom floor. Dealers should be pressing OEMs on supply-chain resilience and preparing for more volatility in availability, incentives, and transaction prices — even when tensions appear to ease temporarily.
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