China poses growing threat to U.S. auto industry

DETROIT – Chinese automakers are a growing threat to their American counterparts – even without selling directly to consumers in the U.S. market.

Sales of Chinese-made cars are growing significantly in Asia, Europe and other countries.China recent reports Auto export volume will exceed 5 million units in 2023, surpassing Japan to become the world’s largest auto export country.

Since 2020, sales from established state-owned companies such as SAIC and Dongfeng, as well as emerging players such as BYD and NIO, have catapulted China from sixth place to the top seed. General Motors Cut back on international operations. The latest data from the U.S. Bureau of Economic Analysis shows that U.S. auto exports in 2022 fell by 25% from the peak in 2016.

The U.S. ranked fourth in the world in auto exports before 2020 and ranked sixth last year, behind fifth-place Mexico, fourth-place South Korea and third-place Germany, according to global consultancy AlixPartners.

Carlos Tavares, CEO of Chrysler’s parent company, said: “My number one competitor is the Chinese automaker.” star, during a virtual media roundtable on Friday. “It’s going to be a big war. For a global automaker like Stellantis that does business around the world, there’s no other way than to go head-to-head with the Chinese automakers. There’s no other way.”

This threat is not limited to export volumes. Chinese automakers have set new standards for vehicle production and pricing.They’re releasing new models at a record pace, and many companies are producing electric vehicles efficiently and profitably — a hint that global automakers, including U.S. General Motors Co. Ford.

Auto experts point out world company Cases and highlights of the rise of China’s automakers. The company, supported by the Beijing municipal government, topped the list last year. Tesla Become the world’s largest seller of electric vehicles.

“A lot of people think the top ten car companies will be Tesla, followed by the nine Chinese car companies. I think they’re probably not wrong,” Musk said at the conference. New York Times Dealbook Conference November.

BYD received about $4.3 billion in state support between 2015 and 2020, according to Rhodium Group estimates To The Economist. Beijing also offers subsidies to incentivize EV buyers.

BYD has cracked the code on low-priced electric cars that seem to transcend borders: Its BYD Seagull is a small electric car that starts at about $11,400, which would significantly reduce U.S. electric car prices even after accounting for the 27.5% U.S. tariff on Chinese manufacturing , cars for less than $15,000.

“This is a car that scares me,” Kristin Dziczek, automotive policy adviser at the Federal Reserve Bank of Chicago’s Detroit branch, said at the organization’s Automotive Insights Symposium last week. “How can we cut the price of electric cars in half? China has already done it.”

Mathew Vachaparaampil, chief executive of Caresoft Global, a car dismantling and consulting firm, estimates BYD makes $1,500 in profit on every Seagull it sells. In the worst-case scenario, he said, the company would break even.

And the company is exporting more vehicles outside China: Overseas markets accounted for about 10% of BYD’s more than 3 million sales last year, a share that doubled from the beginning of the year, according to Bernstein.

“BYD has an unparalleled cost structure and product innovation capabilities stemming from its high degree of vertical integration, which will enable the company to able to thrive in the ongoing electric vehicle race in China and overseas.” “Despite increasing pricing pressure in China, we expect the company’s focus on overseas and high-end markets to support earnings of 29% (CAGR) by 2025.”

Chinese automakers’ growth began in their home country with support from local and federal governments – taking share from mandatory joint ventures between non-domestic automakers and Chinese companies.

For example, General Motors’ market share in China, including its joint ventures, It plummeted from about 15% in 2015 to 8.6% at the end of the third quarter last year.

According to statistics, as of September last year, Chinese companies accounted for 8% of pure electric vehicle sales in Europe. By 2025, Chinese companies’ market share may increase to 15%. European Union. The EU believes that the price of Chinese electric vehicles in the European market is about 20% lower than the price of local models.

The influx of Chinese electric vehicles has prompted the European Union to start providing government support for the industry.

In Mexico, Chinese-made internal combustion engine vehicles have increased their share of the country’s light vehicle sales from 0% to 20% in the past six years, according to the Chicago Fed’s Dicek.

“Mexico is the second largest market for Chinese-made cars after Russia,” she said. “In the near future, they will be on our shores in Mexico.”

For decades, Chinese auto companies have said they would start selling cars in the United States under their own brands, but none have succeeded.

This is not to say that China does not compete in the U.S. market. In addition to major supply chain links, Chinese companies operating in the United States own a handful of car brands, such as Lotus, Volvo (including its spin-off Polestar) and niche electric car maker Karma.

U.S. companies such as General Motors and Ford have or plan to build some vehicles in China and then import them for sale in the United States. General Motors imports Buick Envision into the United States from China, while Ford said last year it would import its upcoming cars. Lincoln Nautilus crossover from China.