General Motors (GM), a U.S. automaker, continues to struggle with poor performance in China, the world's largest automobile market.
According to CNBC on the 17th, GM's market share in China, including joint ventures with Chinese companies, declined from 15% in 2015 to 9.8% last year. This is the first time since 2004 that GM's market share in China has fallen below 10%.
Profits also plummeted. The combined revenue of GM's China division and joint ventures exceeded $2 billion in 2014 and 2015, marking an all-time high, but last year it dropped by as much as 67%. Operating income has decreased by nearly 70% since peaking in 2014.
The sharp decline in performance is analyzed to be the result of a combination of lost competitiveness due to tax incentives and an economic downturn caused by COVID-19. China has been fostering its domestic automobile industry by providing subsidies for electric vehicles equipped with domestically produced batteries. Additionally, local governments have competed to announce purchase subsidy policies for locally produced cars.
Paul Jacobson, GM's Chief Financial Officer (CFO), stated, "I do not believe GM's position in China narrowed last year," emphasizing, "The temporary sales decline in the current Chinese market is a result of government policies in response to the spread of COVID-19."
Michael Dunn, CEO of ZoZo Go, a Chinese autonomous vehicle consulting firm, also explained, "Sales decline in China had already begun before COVID-19," attributing it to the Chinese government's nationalist-based massive subsidies to domestic companies, which caused global companies to fall behind in price competitiveness. In fact, last year, the Chinese electric vehicle company BYD surpassed Tesla to become the top seller of electric vehicles in China.
Other global companies such as Ford and Stellantis are also struggling. Ford's market share in China was 4.8% in 2015 and 2016 but has fallen to around 2% since 2019.
Stellantis agreed in November last year to dissolve its joint venture with Guangzhou Automobile Group (GAC) and withdraw its local production facilities. Over the past four years, the sales volume of GAC Fiat Chrysler, the joint venture with Guangzhou Automobile Group in China, has continuously declined. Sales in 2021 were only 20,396 units, a 50% decrease compared to 2020. Last year's sales were less than 2,000 units.
Some global companies have taken price discounts as a solution to compensate for poor performance in China. BMW is discounting the price of the i3 electric car by nearly $12,000 in Guangzhou, and Volkswagen plans to reduce prices on 20 gasoline and electric vehicle models until the end of next month.
CNBC observed, "While U.S. automakers have benefited from U.S. government measures to protect their domestic industry, Chinese companies have continued to strengthen their position in the domestic market," predicting that the worsening U.S.-China conflict will lead to more complex developments in the poor performance of global automakers in China.
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