The China Passenger Car Association said car sales across the country will drop by 8% this year. It has revised its figure lower twice. China remains the world’s largest car market, although it is losing ground rapidly. The fall-off threatens the revenue of nearly every large manufacturer in the world. None are likely to be hurt more than General Motors Co. (NYSE: GM) and the Ford Motor Co. (NYSE: F)
GM and its joint venture clients are, by most measures, the largest auto group. Ford lags well behind that but admits China sales are critical to its turnaround, on which CEO Jim Hackett has bet his future.
Ford’s sales in China dropped 26.1% last year to 567,854 vehicles. Anning Chen, president and CEO, Ford Greater China, said, “The pressure from the external environment and downward trend of the industry volume will continue in 2020, and we will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers’ profitability.” That neither says much specific nor can it comfort Ford management.
GM’s results were nearly as bad. Along with its joint venture partners, it sold 3.09 million vehicles, down 15.1%. GM said that, in the fourth quarter, poor China sales dented results by about $200 million.
The hardest part of GM and Ford’s challenge is that they are fighting, and losing, a battle for market share. In China, that market is collapsing quickly. Each is up against local companies and international manufacturers, particularly Volkswagen, the market leader, and Toyota, Hyundai and Honda.
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Among the greatest problems Ford and GM have is that new products do not appear likely to get them a surge in sales. Every car company in China is launching new products of their own. GM and Ford face an uphill battle that they are unlikely to win.
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