* Germany's bad year in China

* U.S. finalizes anti-Chinese connected-car rules

* Slower year ahead for Chinese car exports

German automakers' pain in China

It's official. 2024 was a bad year for German automakers in

China.

Porsche in particular had an annus horribilis in China, with

sales plunging 28% as Chinese consumers increasingly held back

on luxury goods because of faltering economic growth and an

ongoing real estate crisis.

But Volkswagen, BMW and Mercedes-Benz all saw sales fall in

China amid stiff competition from local automakers, which has

been a bitter pill to swallow as they have been reliant on

Chinese sales to boost profits.

To make matters worse, as my Reuters colleague Victoria

Waldersee reports, their sales of premium models at home in

Germany have also fallen because of economic uncertainty. You

can read about it here.

Volkswagen has already announced a deal with its German union

for 35,000 future job cuts and sharp capacity reductions to

counter cheaper Chinese rivals and weak demand in Europe.

But the German auto industry's winter of discontent may well be

far from over.

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U.S. finalizes anti-Chinese EV rules

In one of its last acts before exiting stage right, Joe Biden's

administration has finalized rules this week cracking down on

Chinese vehicle software and hardware in connected cars. You can

read about it here.

First proposed in September, this move effectively bans

virtually all Chinese cars and trucks from the U.S. market. It

is thus far more effective than tariffs at keeping out

Chinese-made EVs or even those made by Chinese-owned brands that

had hoped to build cars in U.S. factories.

Polestar, for instance, has said that the ban would "effectively

prohibit" the sale of its cars, even those manufactured in the

United States.

Biden added to Chinese tariffs imposed by Trump, and the

Inflation Reduction Act has further encouraged automakers and

suppliers to avoid Chinese suppliers.

While Trump has promised yet more tariffs on Chinese imports, he

has also said he wants to incentivize Chinese automakers to come

to make cars in the United States. So it remains to be seen if

the new rules will remain in place under Trump.

Slowing Chinese car exports in 2025

China's car export growth is expected to slow in 2025 to around

5.8% versus a hefty 19.3% increase last year as tariffs in

Europe on Chinese-made EVs are expected to further hit electric

car exports.

The China Association of Automobile Manufacturers (CAAM) said EV

exports fell 10.4% last year after rising 80.9% in 2023.

Meanwhile, plug-in hybrid exports were up 190% after posting

growth of 47.8% in 2023.

China ranked as the world's largest auto exporter ahead of Japan

for the second year running in 2024 despite the EU tariffs

introduced in late October.

CAAM forecasts Chinese vehicle sales will rise 4.7% to 32.9

million units this year, following a 4.5% rise in 2024.

BYD's Brazilian labor problems continue

BYD brought hundreds of Chinese workers to Brazil on irregular

visas to build a factory, a key labor inspector told my Reuters

colleagues Fabio Teixeira and Luciana Novaes Magalhaes, bringing

fresh Brazilian labor problems for the Chinese automaker. You

can read about it here.

A total of 163 of the workers, who were hired by BYD contractor

Jinjiang, were found last month to be working in what Brazilian

authorities described as "slavery-like conditions."

Liane Durao, who spearheaded the labor authorities' probe in

Bahia state, told Reuters that BYD has pledged to comply with

local labor laws for the workers it still employs in the

country.

Durao said the 163 workers are in the process of leaving Brazil,

adding that BYD would be fined for each one. She did not say how

much BYD will end up paying.

In December, the labor prosecutor's office described the workers

as human trafficking victims. Jinjiang had withheld the

passports of 107 of the workers, investigators said.

Fast Laps

Sweden's Volvo Group will go ahead with a planned

$700-million heavy-truck factory in Mexico, despite Trump's

tariff threats, its CEO told Reuters.

Hyundai Motor is launching an $18,000 compact electric car in

Japan to penetrate a market dominated by local giants focused on

petrol and hybrid vehicle technologies.

BYD  will launch its Atto 2 compact electric SUV in Europe in

February, despite EU tariffs on Chinese-made EVs.

Stellantis ( STLA ) achieved its goal of cutting its bloated U.S.

inventories by more than 100,000 vehicles late last year, the

company's top North American executive said.

British luxury automaker Rolls-Royce is investing 300 million

pounds to expand its UK Goodwood plant to focus more on bespoke

cars for high-end clients.

Australian law firm Maurice Blackburn has filed a class action

lawsuit against U.S. carmaker General Motors' ( GM ) local Holden unit,

alleging the transmission systems of certain models of the

now-defunct brand were defective.

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(Editing by Mark Potter)