In 2017, GM sold 4 million cars in China, but now sales have dropped by more than half.
Volkswagen’s sales in China fell by 19.3% in the second quarter, while Porsche’s dropped by 39.3%.
With strong government support, Chinese EVs are thriving, weakening the competitiveness of imported brands.
Import car brands like GM (General Motors), Mercedes-Benz, and BMW, which used to make significant profits in China, are now facing tough challenges. Even Hyundai and Kia, which had hoped for a recovery in the Chinese market, are finding it difficult to bounce back.
During the era of gasoline-powered cars, each brand had clear strengths. However, after the Chinese government began vigorously promoting its domestic EV industry, the Chinese automotive market shifted towards EVs, leading to a significant decline in the competitiveness of foreign brands.
According to the industry, GM posted a loss of $104 million in China’s second quarter of this year. This follows a $106 million loss in the first quarter, marking consecutive quarters of losses.
Although the losses aren’t huge, GM’s reporting of losses in China draws significant attention in the industry.
China has been GM’s largest market for over a decade, surpassing even the U.S. In 2017, when GM sold the most cars in China, they hit a record of 4 million vehicles. Between 2014 and 2018, GM’s market share in China was around 14%, but it has been steadily declining and fell to single digits by 2022.
German brands are facing similar challenges. BMW Group, which includes BMW and MINI, saw a 4.7% drop in vehicle deliveries in China during the second quarter compared to last year, selling 188,495 vehicles. Audi also experienced an 11.3% decline in sales during the same period, while Volkswagen’s deliveries in China dropped by a staggering 19.3% year-on-year.
The decline in market share for major global brands is mainly due to the success of Chinese EV companies. In the era of internal combustion engines, foreign brands had an edge with their advanced engine technology, but this advantage has diminished with the shift to EVs.
China’s strong government support for its domestic EV industry has been critical. The government has subsidized companies that build, develop, and mass-produce EVs. While China was a latecomer in the internal combustion engine era, the government is determined to lead the way in the EV era.
Tesla’s influence has also been a factor, with legacy automakers struggling to keep up. Tesla has built a strong reputation as a leader in EVs, not just in the U.S. but also in China. To compete with Chinese companies like BYD, Tesla has aggressively lowered prices and stayed in the game.
While foreign brands are reluctant to give up on the Chinese market, they invest more in China and develop new sales strategies. However, the general consensus in the industry is that it will be difficult for them to regain their past glory.
Chinese brands now dominate the market, and their products have improved to the point where they are recognized globally. These brands are targeting Southeast Asia, Europe, and the U.S.
An industry insider pointed out that the label “Made in China” once suggested cheap and low-quality products. Still, this perception is changing as Chinese EVs continuously improve and gain international recognition. The insider mentioned that the U.S. and Europe are increasing tariffs against China due to competition concerns. They further noted that as the era of internal combustion engines ends, established automotive brands like GM, Ford, and Mercedes-Benz, which thrived during that period, will inevitably experience a decline in market share in China.
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