By Steven Symes 
A new report from CNN focuses on what we saw on the horizon long ago: foreign automakers are considering bailing out of the Chinese market. As recently as last year people in the auto industry were still hailing China as fertile ground for non-domestic car brands to make big bucks. Now, it seems most European, American, even Japanese and Korean auto companies are wondering if they can stick around in the Chinese market.
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As the report notes, there’s been a turning in the market there as domestic brands, which have been proliferating like rabbits, are presenting cheap electric cars to Chinese consumers. What the report doesn’t note is this hasn’t happened organically but instead both the automakers and consumers are being incentivized by the communist government to head in that direction.
Leaders in the country know foreign automakers can’t compete in that way, especially without the powerful government helping them like it does domestic companies, and so Volkswagen, Ford, GM, and others are losing ground in the market rapidly.
According to CNN, GM lost $347 million over the first nine months of 2024 on its joint venture operations in China. Even worse, the auto giant said in early December its net income for the year would be slashed by over $5 billion thanks to trouble in the Chinese market.
Can GM and others afford to stay in China much longer? Probably not and that’s all part of the plan.
We’ve been warning for some time that the Chinese market was a trap, a rathole far too many automakers were willing to pour resources down at the promise of access to a huge populace. That’s been a tool used effectively by the Chinese Communist Party for decades to lure foreign investment, only to then steal technology and intellectual property, then flip the tables on the foreigners. That was always the plan.
By requiring foreign automakers to engage in joint ventures with domestic car companies, the Chinese have learned much about how everyone else makes vehicles. At this point there isn’t much incentive to keep foreign entities around – their usefulness has run its course.
In the meantime, there’s continued talk about Chinese automakers penetrating the US market finally. After seeing the result of their entrance into the Australian and European markets, that’s reason enough for automakers to gird up their loins and start taking the situation more seriously instead of thinking the Chinese government wants to be their friend.
Image via General Motors