Should the three major U.S. automakers exit the Chinese market? Ford said: Quite the opposite

Observer.com

2024-06-19 15:43Posted on the official account of Shanghai Observer.com

With the rise of China's own brands and the intensification of market competition, the market situation of foreign brands in China has become more and more delicate.

According to Reuters, on June 18, local time, Bank of America securities analyst John Murphy (John Murphy) claimed in a speech on the bank's annual industry report "Auto Wars" that the Detroit Big Three (that is, General Motors, Ford Motor and Chrysler, a subsidiary of Stellantis Group) should withdraw from China as soon as possible.

Murphy and other analysts at Bank of America said the big three U.S. automakers must take strict cost-cutting measures in all areas, especially in the internal combustion engine business, which provides most of the profits, in order to compete with electric car makers such as BYD and Tesla. In the Chinese market, it is difficult for foreign brands to compete with Chinese domestic brands, because Chinese consumers are currently very "loyal" to domestic brands. Especially after the United States announced a 100% tariff on Chinese electric vehicles, Chinese consumers' "loyalty" to their own brands will become higher.

GM, Ford and Chrysler, the three major U.S. automakers Image source: Getty Photos

China is the world's largest auto market, but sales of the three major U.S. automakers have declined significantly in the past few years. In 2023, GM will sell about 2.1 million vehicles in China, a year-on-year decrease of about 8.7%; Ford's sales in China were 467,000 units, down 5.7% year-on-year. The localization process of Chrysler's Jeep brand has also come to an end in 2022.

But in response to securities analysts' statements that the U.S. Big Three should exit China, Ford China insiders told the Observer that the facts are "quite the opposite."

The Chinese market is very important to Ford, and Ford will unswervingly develop its business in China, which can be summarized as "focusing on advantages, joint development, increasing exports, and improving efficiency," according to people familiar with the matter.

Regarding the U.S. tariffs on Chinese electric vehicles, people familiar with the matter said that this plan has not yet officially taken effect, and it is believed that with the efforts of global companies, including Ford, the commercial and trade relations between China and the United States can still develop steadily.

In terms of electrification and intelligent transformation, people familiar with the matter said that Ford is continuing to increase investment, including research and development of future products, investment in new electric vehicle and battery production plants, and increased technological improvements in digitalization and intelligence, so as to achieve the plan to create a complete electric vehicle product line.

According to people familiar with the matter, the Chinese market has always been one of Ford's core markets in the world. As one of the core of Ford China's strategy, Ford China will strengthen cooperation with local partners, form a united front, and leverage the resources and advantages of all parties in the R&D, production and sales of new energy vehicles to jointly develop future new energy products. Ford will also accelerate the launch of hybrid models (including hybrids, plug-in hybrids and extended-range hybrids) on the basis of existing combustion engine vehicles, so as to provide consumers with more power options and better meet diverse needs.

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