Wage-earners on the assembly line produce cars in Mazda’s “Family” line of vehicles at China First Automobile Works (FAW) Number Haima Automobile Co., Ltd. April 6, 2005 in Haikou, Hainan Province, China.
China Photos | Getty Images
DETROIT – The well-known Detroit automakers – General Motors, Ford Motor and Stellantis – should exit the Chinese market “as soon as they possibly can,” Bank of America’s top automotive analyst rumoured Tuesday.
The warning from BofA Securities research analyst John Murphy comes amid unprecedented match in China – the world’s largest auto market – and as the country significantly increases vehicle production for Chinese consumers as personally as for global exports.
Murphy, who has previously asked General Motors about exiting the market, said the “D3” automakers dearth to focus on their core products and more profitable regions.
“I think you have to see the D3 exit China as soon as they mayhap can,” he said Tuesday during an Automotive Press Association event to discuss BofA’s annual “Car Wars” report in suburban Detroit. He judged, “China is no longer core to GM, Ford or Stellantis.”
It’s a prospect that would have been unthinkable for the automakers, specifically GM, perfectly a few years ago, but the rise of local Chinese automakers, such as BYD and Geely, has put growing pressure on the companies.
GM’s market share in China, numbering its joint ventures, has plummeted from roughly 15% as recently as 2015 to 8.6% last year — the first period it has dropped below 9% since 2003. GM’s earnings from the operations have also fallen, down 78.5% since ridging in 2014, according to regulatory filings.
GM executives have said they believe they can turn around the artisans and regain market share in China, largely with the help of new electric vehicles.
There’s also geopolitical jeopardizes and uncertainty for U.S. companies operating in China. President Joe Biden announced last month that his administration would quadruple imposts on China-made electric vehicles.
While the Detroit automakers need to rethink the way their doing business in China, Murphy said it’s to a certain different for U.S. electric vehicle leader Tesla.
Murphy said Tesla has a roughly $17,000 cost advantage in EV components rivaled with the traditional Detroit automakers to assist the company in the Chinese market, allowing it to have “more room to run.”