Assembly line employees produce cars at Mazda's “Family” vehicle line at China First Automobile Works (FAW) Group Haima Automobile Co., Ltd. April 6, 2005 in Haikou, Hainan province, China.
Photos from China | fake images
DETROIT – Detroit's Traditional Automakers – General Motors, Ford engine and stellantis – should exit the Chinese market “as soon as possible,” Bank of America's top automotive analyst said Tuesday.
The warning from BofA Securities research analyst John Murphy comes amid unprecedented competition in China – the world's largest auto market – and as the country significantly ramps up vehicle production for Chinese consumers, as well as for 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 need to see the D3 come out of China as soon 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 core to GM, Ford or Stellantis.”
It's a prospect that would have been unthinkable for automakers, specifically GM, just a few years ago, but the rise of local Chinese automakers such as BYD and Geeleyhas put increasing pressure on companies.
GM's market share in China, including its joint ventures, has plummeted from about 15% in 2015 to 8.6% last year, the first time it has fallen below 9% since 2003. GM operations have also fallen, 78.5%. % since peaking in 2014, according to regulatory filings.
GM executives have said they believe they can turn around operations and regain market share in China, largely with the help of new electric vehicles.
There are also geopolitical risks and uncertainty for US 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 need to rethink the way they do business in China, Murphy said it's slightly different for the U.S. electric vehicle leader. 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, allowing it to have “more room to run.”
