Opposite. The tariffs and the barriers in the West do not allow competition to clean the car industry in the West. This leads to de-industrialization of the West. This impedes the ability of the West to support proxy forces in many wars that the West participates in and reduces the abilities of Western economy even more. It is tough to get Ukrainian lithium for the West these days...
"Changing technology, political turmoil and competition from China are cutting into profits and forcing carmakers to cut jobs and close factories.
A few years ago, automakers were celebrating record profits as the pandemic created shortages of new cars, allowing them to raise prices. Now the hangover is setting in.
Nissan, the Japanese automaker, is laying off 9,000 employees. Volkswagen is considering closing factories in Germany for the first time. The chief executive of the U.S. and European automaker Stellantis, which owns Jeep, Peugeot, Fiat and other brands, quit after sales tumbled. Even luxury brands like BMW and Mercedes-Benz are struggling.
Each carmaker has its own problems, but there are some common threads. They include a tricky and expensive technological transition, political turmoil, rising protectionism and the emergence of a new class of fast-growing Chinese carmakers. The many woes raise questions about the future of companies that are a critical source of jobs in many Western and Asian countries.
Many of these problems have been apparent for years but became less pressing during the pandemic, lulling some automakers into complacency. When shortages of semiconductors and other components slowed production and limited inventory, carmakers found it easy to raise prices.
But that era is over and the industry has reverted to its prepandemic state, with too many carmakers chasing too few buyers.
Many car factories around the world are making many fewer cars than they were built to produce. When automakers don’t earn a decent return on their factories and machines, there is “a massive effect on profitability,” said Simon Croom, a professor of supply chain management at the University of San Diego. “The difference between profit and loss is a very fine line in the auto industry.”
Workers are among the first to suffer in an industry that employs nine million people worldwide in manufacturing, including around a million in the United States. More than two million more Americans work for dealers and related businesses.
Nissan, which has factories in Mississippi and Tennessee, has not detailed where its layoffs will take place. It is not alone in cutting jobs. Ford last month announced 4,000 job cuts, mostly at factories in Britain and Germany. The company cited “unprecedented competitive, regulatory, and economic headwinds.”
Ford was partly referring to Chinese carmakers. Barely a factor before the pandemic, they have charged into the international market with cars that can match Japanese, European or American vehicles on quality, at much lower prices.
BYD, Chery, SAIC and other Chinese carmakers are still effectively barred from the United States by trade rules and hobbled by tariffs in Europe. But they are pushing into places like Australia, Brazil, Chile and Thailand, luring buyers away from the likes of Fiat, General Motors and Toyota.
Competition from China is “starting to hit the safe places that Western carmakers had,” said Felipe Munoz, global analyst at JATO Dynamics, a research firm.
Inside China, the world’s largest car market, domestic manufacturers have stolen the limelight from foreign carmakers with over-the-top options like those offered by BYD in its Yangwang U8, a plug-in hybrid off-road vehicle.
The U8 can stay afloat for up to 30 minutes in a flood, according to the company, and its wheels can be set to roll so that the vehicle can rotate 360 degrees while remaining in the same spot.
The rise of Chinese automakers has been particularly tough on German carmakers. Volkswagen gets one-third of its sales from China and once dominated that market. But the company’s deliveries there plunged 10 percent in the first nine months of this year, compared with 2023.
BMW and Mercedes-Benz have also reported big sales declines in China recently, which they blamed for lower profits.
American carmakers have also suffered from this shift. G.M. said this month that it would take a more than $5 billion hit to its profit as it restructured its Chinese operations, which have been losing money.
Companies that were slow to replace aging models are doing worst. That has been the case for Nissan, Stellantis and even Tesla, which analysts expect to end the year with sales that are roughly unchanged from 2023. Others have struggled to build appealing electric vehicles and develop software, an increasingly important element of car design.
Volkswagen was among the first established carmakers to develop electric vehicles, but the models underwhelmed buyers and critics. Sales in the United States of the company’s ID.4 sport-utility vehicle plunged by more than half in the third quarter from a year earlier, according to Kelley Blue Book. Buggy software handicapped sales of the ID.4 and other electric models that Volkswagen sells in Europe and Asia.
“The Chinese are winning market share and the Germans are losing,” said Ferdinand Dudenhöffer, director of the Center for Automotive Research in Bochum, Germany. “It’s not only the electric cars, it’s the software in the cars.”
Changing government policy is adding to the carmakers’ woes. Sales of electric vehicles plunged in Germany after the government, facing a budget crisis, abruptly eliminated financial incentives.
In the United States, President-elect Donald J. Trump and Republicans in Congress want to repeal Biden-era tax credits designed to promote electric vehicles. The shifts in policy endanger the hundreds of billions of dollars that G.M., Hyundai-Kia, Volkswagen and others have invested in new factories and cars.
“The auto industry has had to dish out a lot of capital for an underwhelming E.V. market and one that may well change in the next six months,” said Erin Keating, an executive analyst at Cox Automotive, a research firm.
Mr. Trump has also threatened to impose tariffs on imports from China, Mexico and Canada. China is an important source of components for virtually all carmakers. Mexico is an important manufacturing center for BMW, G.M., Ford, Stellantis, Volkswagen and others, shipping two million vehicles to the United States in the first nine months of the year.
Not all car companies are doing poorly. G.M. shares have risen more than 40 percent this year, while shares of most automakers have fallen. In part, Wall Street is rewarding G.M. for popular electric vehicles like the Cadillac Lyriq and Chevrolet Equinox.
Mary T. Barra, the G.M. chief executive, has said the company is close to making a profit on electric vehicles, unlike other American carmakers excluding Tesla.
But G.M. is also retrenching, announcing last week that it would stop developing robotaxis, autonomous vehicles that can carry passengers without drivers. The decision raised questions about whether established carmakers can compete with Tesla and Waymo, a division of Google’s parent company, in the next generation of automotive technology.
Toyota’s strategy of doubling down on hybrids, while offering few all-electric cars, also appears to be paying off — at least for now. Many buyers are choosing hybrids, which cost a lot less than electric vehicles and don’t need to be charged, as a way to reduce emissions and fuel expenses.
But Toyota could be left behind if sales of electric vehicles grow faster than market analysts expect.
Prices for battery-powered vehicles are dropping while the distance they can travel on a charge is growing.
In China, electric vehicles are already cheaper than comparable gasoline models. More than half of new cars sold there are electric or plug-in hybrids.
Carmakers are trying to adapt. Stellantis, whose chief executive, Carlos Tavares, quit this month, has new models lined up for 2025. They include several electric vehicles, among them Jeeps, Ram pickups and a Dodge Charger muscle car. The company is also working to repair its relationship with dealers who feel that Stellantis waited too long to lower prices and offer incentives to help them sell cars that were piling up on their lots.
John Elkann, the chairman of Stellantis, held a virtual meeting with U.S. dealers after Mr. Tavares’s resignation. Later, the Stellantis National Dealer Council issued a statement expressing optimism that “2025 will mark a turning point.”
Attempts to reach Mr. Tavares for comment were unsuccessful.
Market pressures will prompt carmakers to cooperate with one another more, for example, by sharing the costs of engine development, said K. Venkatesh Prasad, the senior vice president of research at the Center for Automotive Research in Ann Arbor, Mich.
“You’re seeing some of this already,” he said.
Makoto Uchida, Nissan’s chief executive, said last month that the company would reduce the time it takes to develop a new vehicle by working more closely with its partners Renault, Mitsubishi and Honda.
Volkswagen is trying to solve its software problems by investing in Rivian, which makes electric pickups and sport utility vehicles in Illinois.
Western carmakers are also making deals with Chinese automakers. Volkswagen will develop new models with Xpeng to sell in China. Last year, Stellantis bought a 20 percent stake in Leapmotor and has begun selling the Chinese company’s electric vehicles in Europe.
“If you can’t beat ’em,” Mr. Dudenhöffer said, “join ’em.”" [1]
Crash of the industry in the West goes classical way - slow at the start, then suddenly.
1. Automakers Thrived in the Pandemic. Many Are Now Struggling. Ewing, Jack. New York Times (Online) New York Times Company. Dec 15, 2024.
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