Sales plummet, US automakers worry about losing billion-people market

Competition in China's auto market is getting fiercer

Support from the Chinese government has helped domestic auto companies develop and compete strongly in the market, especially in the field of technology and software for electric vehicles.

These investments and subsidies help Chinese companies research, develop and produce advanced auto products, while reducing production costs and increasing competitiveness. This has caused US auto sales in China to decline significantly, from their peak a few years ago.

“It is likely that major automakers such as Ford, GM, Hyundai, Kia and Nissan could exit the Chinese market within the next five years, as they are no longer competitive,” said Michael Dunne of Dunne Insights, who has studied the Chinese market and other Asian countries for nearly 30 years.

General Motors (GM) sales in China, including those from joint ventures it maintains in the country, have fallen from a high of 4 million vehicles in 2017 to 2.1 million in 2023. That would be below U.S. sales of 2.59 million for the first time since 2009.

China's auto market is vibrant and highly competitive. (Photo: CNBC)

General Motors’ earnings per share decline from China is a telling sign of the company’s performance in the country. Earnings fell 34% on the year to $446 million, and a 54% year-over-year decline in the fourth quarter alone, suggesting GM is facing serious challenges in the Chinese market.

Several factors have contributed to the decline of American automakers in China, including competition from Chinese automakers, challenges to costs and margins, and foreign rivals.

Chinese automakers not only have the advantage of low production costs, but also government support, a deep understanding of the local market, and flexibility in responding to consumer needs.

With increasing competition from Chinese automakers, American and many other countries' manufacturers are having to find ways to adapt or limit their operations in this market.

China boosts innovation, investment, international cooperation in auto manufacturing

Chinese automakers have learned a lot from foreign automakers through collaboration and acquisitions of brands, such as British and Swedish, aiming to access technology and management knowledge from foreign companies. China has acquired brands such as MG, Lotus and Volvo, helping them expand their operations and strengthen their brands in the global market.

In addition, Chinese automakers, such as BYD, have increased investment in research and development of advanced automotive technologies, including electric vehicles and self-driving cars.

At the same time, China is also actively cooperating with foreign companies, such as Berkshire Hathaway in BYD. This demonstrates the interest and confidence in the development potential of the Chinese auto industry. The cooperation process helps bring financial benefits, providing capital and management knowledge to Chinese automakers.

The Chinese auto market has undergone significant changes over the past decade, with the rapid development of smart, connected technologies in the auto industry. Bill Russo, a former Chrysler executive who runs Automobileity, a Shanghai-based consultancy, said that American automakers should not abandon the Chinese market despite declining sales.

For U.S. automakers and their non-Chinese counterparts, finding the right, flexible growth strategy in a competitive market is essential. This may include increasing research and development, finding local strategic partners, and optimizing marketing and sales strategies.

Source: https://congthuong.vn/doanh-so-ban-hang-giam-sau-cac-nha-san-xuat-o-to-my-lo-mat-thi-truong-ty-dan-319618.html