The leading Detroit automakers, known as the Big Three, have been advised by Bank of America’s (BoA) top auto analysts to withdraw from the Chinese market for cost-cutting purposes. According to media outlets on June 18, BoA analyst John Murphy put forth this advice in his annual report titled “Car Wars.” Media outlets reported that the auto industry closely watches Murphy’s yearly report.
In the report, Murphy said, “I believe the Detroit Big Three should leave China as soon as possible.” The Big Three in the U.S. are Ford, General Motors, and Chrysler, now known as Stellantis after merging with Italy’s Fiat and France’s Peugeot.
Murphy suggested that the Big Three must take more aggressive measures to reduce their expenses, especially in the gas-engine sector, which accounts for most of their profits today.
Electric vehicle (EV) sales in the U.S. have been weaker than expected, and the Big Three are focusing on cost-cutting across all business sectors. At an event hosted by the Automotive Press Association in suburban Detroit, Murphy stated, “We need to manage our core business very aggressively,” adding, “It’s tough medicine, and there’s a lot of hard work here in the U.S.”
According to a prominent media outlet, auto analysts, including Murphy, agree that overcoming Chinese companies’ momentum is difficult. Murphy suggested that Chinese consumers have strong loyalty to their domestic brands, and the U.S.’s 100% tariff on Chinese EVs starting August 1 could further strengthen this loyalty.
Over the past decade, Ford and GM’s sales in China have declined. In response, the media outlet added that Ford is transforming its Chinese operations into an export hub, mindful of fierce competition with Chinese rivals such as BYD and Geely Auto.
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