Assembly line workers produce cars from Mazda’s “Family” vehicle line at China First Automobile Works (FAW) Group Haima Automobile Co., Ltd. April 6, 2005 in Haikou, Hainan Province, China.
China photos | Getty Images
DETROIT – The traditional Detroit automakers – General Motors, Ford engine And Stellantis — should exit the Chinese market “as quickly as possible,” Bank of America’s top automotive analyst said Tuesday.
The warning from research analyst John Murphy of BofA Securities comes amid unprecedented competition in China – the world’s largest auto market – and as the country significantly increases vehicle production for both Chinese consumers and global exports.
Murphy, who previously asked General Motors about exiting the market, said “D3” automakers need to focus on their core products and more profitable regions.
“I think you have to make sure the D3 gets out of China as quickly as possible,” he said Tuesday during an Automotive Press Association event to discuss BofA’s annual “Car Wars” report in suburban Detroit. He said: “China is no longer the core of GM, Ford or Stellantis.”
It’s a prospect that would have been unthinkable for automakers, particularly GM, just a few years ago, but the rise of local Chinese automakers such as BYD And GeelyThe pressure on companies is growing.
GM’s market share in China, including its joint ventures, fell from about 15% in 2015 to 8.6% last year – the first time it fell below 9% since 2003. GM’s operating profits have also fallen 78.5% since peaking in 2014, according to regulatory filings.
GM executives have said they believe they can transform operations and regain market share in China, particularly with the help of new electric vehicles.
There are also geopolitical risks and uncertainties for U.S. companies operating in China. President Joe Biden announced last month that his administration would quadruple tariffs on electric vehicles made in China.
While Detroit automakers are having to rethink how they do business in China, things are a little different for the U.S. electric vehicle leader, Murphy said Tesla.
Murphy said Tesla has a cost advantage of about $17,000 in electric vehicle components compared to traditional Detroit automakers to help the company in the Chinese market and “give it more headroom.”
Don’t miss these exclusives from CNBC PRO
Source link
2024-06-18 19:09:51
www.cnbc.com
