A tsunami of cheap cars manufactured in China would wash over America, just like all the other products from China – those were the predictions and fears over the years. It seemed inevitable. The US auto market, until recently the biggest in the world, was just too juicy. But it hasn’t quite worked out.

Some efforts are still underway. Guangzhou Auto Group, sixth largest car manufacturer in China and joint-venture partner of Toyota and Honda, is trying to line up dealers in the US while researching how to comply with US regulations, the company announced in April. It plans to start selling its China-made models in the US by 2017.

In May, British sports-car maker Lotus announced that it would build SUVs in China to be exported to Europe and possibly the US. Honda already sold Chinese-made Fits in Canada for a while but then, in a sign of the North American market dynamics, shifted production to its new plant in Mexico.

Volvo, owned by Zhejiang Geely Holding, started shipping the China-made S60 Inscription to US dealers this year. Called S60L in China, it’s the long-wheelbase version of the S60 sedan, which is still manufactured in Sweden. Once the new plant in Chengdu runs at full capacity, it can produce 120,000 vehicles annually. This is the first, and so far only, mass-produced car from China on US streets. Not exactly a tsunami.

Turns out, the battle ground for the best, most efficient, and most advanced automakers in the world is a tough nut to crack.

In other parts of the world, Chinese vehicle exports had a promising start. By 2012, export volume of passenger cars and commercial vehicles had reached 1.06 million units, nearly triple the export volume in 2009 and 5.4% of total vehicle production in China. There were huge hopes that, as sales growth in China would slow, exports would push production to the next level.

Then it all fell apart.

By 2014, exports were down to 910,400 vehicles. Sales in key markets Russia and Ukraine plunged. In another key market, Argentina, the currency crashed. And in Algeria and Iraq, sales were hit hard because the price of oil had crashed. It’s tough out there.

So in May, according to the China Association of Automobile Manufacturers, China exported 70,800 vehicles, down 7.3% from the already lousy levels of 2014. Commercial vehicle exports, at 32,700, dropped 2.4%; passenger vehicle exports dropped 11%.

The already miserably low export target of 860,000 vehicles for 2015 is moving further out of reach: for the first five months, China exported 316,200 vehicles, down 13% from the same period a year ago, with commercial vehicles down 5% and passenger cars down 19%.

The auto export fiasco comes at the worst possible time for China. Domestic sales growth is stalling: in May, sales inched up 1.2% from a year ago, despite hefty discounts offered by a number of manufacturers, including the top two, GM and VW.

And it confirms the broader trend of manufacturing in China. The HSBC/Markit Flash China Manufacturing PMI for June, reported today, came in at 49.6, below the 50-mark, and thus in contraction mode, for the fourth month in a row. Ominously, staff reductions by manufacturers were the sharpest since the Financial Crisis.

Manufacturers are seeing the writing on the wall and are preparing for it: demand for Chinese goods, domestic and overseas, is slowing, and manufacturing, one of the drivers of the Chinese economy, has been experiencing a hard landing all year.

Now everyone is hoping that the central government and the People’s Bank of China will perform some miracles by dousing the land with more “stimulus” of one sort or another, so that people, businesses, and local governments can borrow even more. While that strategy might work to get more ghost cities built and more overcapacity added to the manufacturing sector, including the auto industry where overcapacity turns into a deadly disease, and while it might inflate the stock market to even more insane heights and goose home prices, it’s not going to boost demand in other countries – and might not even boost demand in China.

“Sluggish westbound volumes have brought about the worst spot market rate collapse that this trade has experienced.” That’s how Drewry Maritime Research summarized the collapse of the rates for shipping manufactured goods from China to the West. Read… Container Shipping Rates from China to US, Europe Collapse

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