SHANGHAI – With the Chinese new-vehicle market about to post a second straight annual decline, American brands find themselves confronting new challenges.
They are losing market share at the same time they face more regulatory pressure to improve fuel economy and ramp up electrified vehicle output.
With Volkswagen and top Japanese brands Toyota and Honda accelerating new product launches, Chevrolet, Ford, Jeep and other American brands are losing ground at an alarming rate.
In 2018, the aggregate share of the Chinese new light-vehicle market owned by American brands dropped to 10.5 percent from 12.3 percent in 2017.
In the first 10 months of the year, their collective market share dipped to 9.5 percent, according to figures released by the China Association of Automobile Manufacturers.
General Motors, Ford Motor Co. and Fiat Chrysler Automobiles do not disclose monthly deliveries in China. But sales results from their local partners show that while the contraction in the overall new-vehicle market has slowed, the decline in sales at American brands hasn’t.
In October, new light-vehicle sales in China slipped 5.8 percent to less than 1.93 million.
But deliveries at SAIC-GM – General Motors’ passenger-vehicle joint venture that builds and markets vehicles for Buick, Chevrolet and Cadillac – slumped 25 percent to around 136,820.
Sales of Ford-brand vehicles built at Ford Motor Co.’s two local partnerships – Changan Ford and Jiangling Motors Corp. – fell 12 percent to less than 27,000. The two joint ventures account for most of the U.S. automaker’s China sales.
October deliveries at the Jeep brand plunged 42 percent to 5,432, according to FCA’s local partner, GAC Motor Co.
While continuing to underperform the market, American brands have become laggards in complying with China’s mandatory targets for fuel economy and electrified output expansion.
Under Chinese rules, automakers operating in the country must cut average fleet fuel consumption to 5 liters per 100 kilometers (47 mpg) in 2020 from 6 liters (39 mpg) in 2016. They are also required to further lower fuel consumption to 4 liters per 100 kilometers (58.8 mpg).
But GM, Ford and FCA, which only builds Jeep vehicles locally, ranked among the 10 worst performers in 2018 for meeting fuel-economy requirements, according to the Ministry of Industry and Information Technology, China’s top auto industry regulator.
Beijing has also enacted a carbon credit program to push passenger-vehicle manufacturers to build more electrified models. Under the plan, only domestically assembled battery-electric vehicles and plug-in hybrids qualify for carbon credits.
Yet GM, which sold nearly 2 million vehicles under Buick, Chevrolet and Cadillac last year, has only two locally produced electrified models – the Buick Velite 6 EV and the Cadillac CT6 plug-in hybrid – in its China product mix.
By contrast, VW Group, GM’s main rival in China, has six locally built electrified models – three EVs and two plug-in hybrids under the VW brand as well as the plug-in version of the elongated Audi A6.
Like GM, Ford also has only two electrified products – the battery version of the Ford Territory crossover and the plug-in variant of the Ford Mondeo sedan.
Among the four Jeep models that FAC produces in China – the Cherokee, Renegade, Compass and Grande Commander – the plug-in version of the Grand Commander is the only electrified product.
While FCA hasn't shared plans to revive its China operations, GM and Ford plan to roll out a slew of new products.
In October 2018, GM said it would launch 20 EV models globally by 2023, many of which will be sold in China. And in April, Ford said it would introduce more than 30 new and upgraded models, including at least 10 electrified vehicles, under the Ford and Lincoln brands over the next three years.
Unless the Detroit 3 can step up the introduction of new and redesigned models, especially energy-saving and electrified vehicles, the prospects for America’s brands in Chinese will slip further.