Withdrawal from the world's largest car market has started

About half of this sum reflects the costs for a restructuring - probably with the aim of reducing the operations on site. The other half is the result that the value of Chinese activities is no longer justified under the current economic conditions. Jeff Schuster, Global Vice President for Automobile Research at Globaldata, stated: "You can look back for 15 or 20 years when GM's China operations served as a lifesaver. This is definitely no longer the case. It is a money grave."

The situation for other western automobile manufacturers

GM has not yet announced any details about his realignment in China, but Schuster and other experts explained that most western automobile manufacturers, including GM, think about how long they can stay in the world's largest car market. GM CEO Mary Barra said to investors in October that the western automobile manufacturers in China are faced with "a very challenging environment", but is convinced that GM can create the turn. Others are not so sure.

"There were golden years for GM in China, but they are over and you will never have a comeback story," said Michael Dunne, an industry consultant who has been involved in the efforts of Western manufacturers in China since the 1990s, including the market entry of GM.

market change and progress of the Chinese brands

Some western automobile manufacturers who wanted to build and sell vehicles in China at the end of the 1990s and early 2000s are also fighting. Chinese consumers who once preferred Western brands now see a better price-performance ratio in Chinese brands. This new preference is largely promoted by the politics and incentives of the Chinese government, which promote a change of conventional cars with petrol engines to electric vehicles and plug-in hybrids.

According to data from the China Passenger Car Association, Chinese automobile manufacturers sell around 70 % of the vehicles in the country. Five years ago, they only had 38 % of the market, while foreign brands had the rest.

The challenges of the joint ventures

entered the Chinese market as a GM, the partnership with Chinese manufacturers who had to hold at least 50 % of the joint venture was a basic requirement. However, Dunne sees little chance that GM will extend his cooperation with Saic, which expires in 2027. He assumes that many other western manufacturers will also stop their efforts.

Stellantis, the European automobile manufacturer, the North America cars under the brands Jeep, Ram, Dodge and Chrysler produced, his joint venture saw bankruptcy for the production of Jeeps in China after it had written losses for years. Ford states that it is still profitable in China, but the majority of the income from exports to other Asian markets and South America.

China's advance to electric vehicles

The biggest problem is China's recent transition from conventional petrol vehicles to electric vehicles and plug-in hybrids, which now make up most of the market. National guidelines and incentives have pushed buyers in the direction of EVS, where they found better cars and a better price-performance ratio for Chinese brands.

"Ten years ago President Xi Jinping and the Chinese automobile manufacturers decided: 'We have followed the global manufacturers in terms of combustion engine vehicles and do not get. We rely entirely on electrical'," reported Dunne. Western automobile manufacturers, on the other hand, tried to capture their course with petrol -powered vehicles. Now - with the exception of Tesla who have a factory in Shanghai - these companies are far behind and are fighting to keep up with the cheaper electric vehicles and hybrid of Chinese manufacturers like BYD.

miscalculation of the western manufacturers

It was a massive failure of the western manufacturers, as Bill Russo, Head of the Investment Consulting Automobility specializing in automotiveism, states. "The foreign brands did not prioritize it. They did not see the development come," he added. Much of the change in the market took place during 2020 and early 2021. The Covid 19 pandemic made it difficult for the top managers of Western manufacturers to travel to China, which made it easier for them to miss the shocks in the market.

In addition, all western automobile manufacturers have now announced plans to sell more electric cars, but they will offer petrol -powered vehicles for at least the next ten years. And they still lose money from e-car production, while Chinese competitors win market shares.

The future of western automobile manufacturers in China