Western car manufacturers with a hand in the potty. Will they eventually have to leave China?

Luc Williams

Chinese companies, thanks to government investments and subsidies, have overtaken the competition in the field of electric vehicle technology and software. Meanwhile, car sales by American companies have fallen dramatically from their peak a few years ago.

Drastic decline in GM sales in China

GM's sales in China, including sales of joint ventures the company maintains in the country, fell from a high of 4 million vehicles in 2017 to 2.1 million in 2023. That's lower than U.S. sales, which for the first time since 2009 it amounted to 2.59 million. – CNBC reported.

Earnings on equity, GM's measure of earnings in its second-largest market, fell 34%. during the year to $446 million, which includes a decline of 54%. year-on-year only in the fourth quarter.

“I don't want it to sound too dramatic,” said Michael Dunne of Dunne Insights, who has been researching markets in China and other Asian countries for almost 30 years, as quoted by CNBC. “I want to be realistic in saying that in the next five years, Ford, GM, Hyundai, Kia and Nissan will most likely leave China. They are simply no longer competitive with the Chinese,” he said.

Where to look for the reasons for the collapse of American car manufacturers in China?

Several factors contributed to the decline of American automakers in China.

As CNBC notes, Chinese automakers have learned a lot from foreign competitors. Later, successful Chinese companies bought foreign brands, including British brands MG and Lotus and Swedish Volvo.

Moreover, the Chinese market has undergone radical technological changes over the last decade. The concept of a car as a moving computer or smartphone in the Middle Kingdom has already become a reality.

Why should Americans take up the challenge and stay in China?

Quoted by CNBC, Bill Russo, a former Chrysler executive who runs the Automobility consulting firm in Shanghai, believes that despite sales failures, American manufacturers should not give up on China because the changes that have occurred over the past few years will persist.

“If you don't compete in China, what will you do when China comes to your backyard?” Russo said. “How do you know how to compete with them? If you haven't even tried.”


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