Commentary: US car industry is passing the baton to China with barely a fight

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Cars Noticias

United States,China,Automakers

Detroit got the world on the road but BYD will inherit the earth, says Bloomberg Opinion's David Fickling.

Detroit got the world on the road but BYD will inherit the earth, says Bloomberg Opinion's David Fickling.

It’s no secret that these ventures are struggling. A decade ago, equity-accounted income from China made up more than half of GM’s net profit, but in the first nine months of this year they racked up a US$347 million loss. Things are better with local brand Wuling, whose tiny electric vehicles cost about US$8,000, but Baojun, GM’s other local JV model, also appears to be circling the drain.Barra has long reaffirmed her commitment to China, but the outlook has rarely looked bleaker. GM and SAIC are locked in meetings through the end of the year to restructure their holdings to make them profitable.

Chinese-made cars or components that transmit data have been banned from the US market under rules introduced by President Joe Biden in September. His successor Donald Trump has mooted 60 per cent tariffs on Chinese imports, and retaliation from Beijing is likely to focus on US-made cars, still one of the biggest trade flows in the opposite direction.

It’s not a foregone conclusion that GM will quit the world’s largest car market, but it would be in keeping with Barra’s similarly dramatic decisions to exit Europe and India in 2017. Such a move would largely be welcomed by the investors who’ve driven shares to about double their level when rumours of a retreat from China started to circulate a year ago.

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