According to data from the China Passenger Car Association, Chinese automakers now dominate the country’s car market, accounting for about 70% of sales. Just five years ago, they held only 38% of the market, with foreign brands claiming the remainder. When GM first entered the Chinese market, Western automakers were required to form joint ventures with Chinese manufacturers holding at least a 50% stake. However, industry experts predict that GM is unlikely to renew its joint venture with SAIC, which is set to expire in 2027, and other Western automakers are also expected to follow suit.
Stellantis, the European automaker behind brands like Jeep, Ram, Dodge, and Chrysler in North America, faced challenges when its joint venture producing Jeeps in China went bankrupt in 2022. While Ford remains profitable in China, most of its joint venture earnings come from exporting to other Asian markets and South America.
The shift in China towards electric vehicles (EVs) and plug-in hybrids has significantly impacted the market. As Chinese brands offer better value and quality EVs, Western automakers find themselves lagging behind. President Xi Jinping’s decision to prioritize EVs over traditional gasoline-powered vehicles a decade ago has proven successful for Chinese automakers, leaving Western companies struggling to catch up.
Despite announcements to increase EV production, Western automakers are still primarily focused on gasoline-powered vehicles for the foreseeable future. This has led to financial losses and a loss of market share to Chinese competitors. Industry experts warn that prematurely abandoning the Chinese market would be a grave error, as Western automakers will need to adapt to stringent emission standards and rising competition from Chinese EVs.
