China's economic slowdown impacting on European manufacturers. - Healthy performances by European manufacturers during the first quarter of 2015 (see above) have, nonetheless, been dampened by the economic slowdown in China, the leading global market where 23.5 million vehicles were sold in 2014. Together with the energy sector, the automobile sector has in effect been the most overexposed sector in China and manufacturers there achieved 11% of their sales. Over the first seven months of the year, car sales stagnated in China (just +0.4%) and new car registrations in China fell by 7.1% to 1.5 million units in July. This is the biggest fall since February 2013 because there has now been a decline in deliveries for the fourth month in a row. According to Allianz Global Investors France, Chinese production capacity is expected to increase from 23 million vehicles in 2014 to 30 million in 2017 but current demand is unable to absorb the huge level of supply. In Europe, German manufacturers are suffering most from the situation because China accounts for almost 40% of pre-tax profits for BMW and Volkswagen. According to Allianz Global Investors France, French manufacturers have been affected later by the crisis than German manufacturers and their sales have been down since April but they have been suffering the full force of the slowdown since the summer. European manufacturers are, as a result, compelled to revise their expansion strategies downwards in China, a country where they have made significant investments to promote expansion from 60-65 million vehicles a year to potentially 100 million. The rate of growth in the BRIC block appears to be drying up and according to Allianz GI Europe the car sector will be returning to its historic cyclical sector status as a result. (Isabelle Lamberty)