Workers produce Mazda “family” models on an assembly line at China FAW Group’s Haikou Automobile Co., Ltd., in Haikou, Hainan province, China, April 6, 2005.
China Photos | Getty Images
Detroit – Traditional Detroit automakers – General Motors, Ford Motor Company and Stellantis Bank of America’s top auto analyst said on Tuesday that Nissan Motor Co. should withdraw from the Chinese market “as soon as possible.”
The warning from John Murphy, a research analyst at Bank of America Securities, comes as unprecedented competition is brewing in China, the world’s largest auto market, which is dramatically increasing vehicle production not only for domestic consumers but also for global export.
Murphy, who has previously questioned General Motors about exiting the market, said the “D3” automaker needed to focus on its core products and more profitable geographies.
“I think D3 should get out of China as soon as possible,” he said Tuesday at an event in suburban Detroit hosted by the Bank of America Automotive Press Association for its annual “Car Wars” report. “China is no longer core for GM, Ford and Stellantis,” he said.
This was an unthinkable prospect for an automaker, especially GM, just a few years ago. BYD and Geelyis increasing pressure on companies.
GM’s market share in China, including joint ventures, plummeted to 8.6% last year from about 15% in 2015, the first time it has fallen below 9% since 2003. GM’s operating revenue is also down 78.5% from its 2014 peak, according to regulatory filings.
GM executives have said they believe the company can turn around its business and regain market share in China, largely on the back of new electric vehicles.
There are also geopolitical risks and uncertainties for U.S. companies doing business in China: President Joe Biden announced last month that his administration would quadruple tariffs on Chinese-made electric vehicles.
While Detroit automakers are having to rethink how they do business in China, Murphy said it’s a little different for the U.S. electric vehicle leader. Tesla.
Murphy said Tesla has a cost advantage of about $17,000 over traditional Detroit automakers on EV parts, helping the company grow in the Chinese market and giving it “more room to grow.”
