According to media reports, Bank of America Securities analyst John Murphy stated on June 18 that traditional American automakers such as Ford and General Motors should exit the Chinese market to preserve capital during the costly transition to electric vehicles.
Murphy mentioned in his annual "Car Wars" report, "I think you will see the (Detroit Big Three) exiting China as quickly as they can." Murphy's "Car Wars" is a highly regarded industry report.
Murphy believes that to compete with electric vehicle manufacturers like Tesla and Chinese automakers, the Detroit Big Three must implement effective cost-cutting measures to maintain their competitiveness.
In response to electric vehicle sales falling short of expectations, Ford, GM, and Jeep's parent company Stellantis have focused on reducing costs across all business areas. Murphy warned that these companies might need to take even more drastic measures to cut costs, especially in their gasoline-powered vehicle businesses, which are currently the main source of profits.
At an event in Detroit, Murphy stated, "Companies need to aggressively manage their core business, which is indeed a tough pill to swallow. There is still a lot of hard work to be done in this regard."
As the world's largest automotive market, China poses many challenges for many foreign automakers, especially in recent years. Murphy and other analysts have pointed out that foreign automakers find it difficult to overcome the advantages of Chinese domestic automakers. Murphy noted that Chinese consumers have high loyalty to local brands, which may increase even more after the U.S. imposes tariffs exceeding 100% on Chinese imported electric vehicles starting August 1.
Over the past decade, Ford and GM's sales in China have been declining. China was once GM's largest market, but the company is now struggling to maintain profitability there. Ford is also feeling fierce competition from local automakers like BYD and Geely and is currently transforming its Chinese operations into an export hub.
