SYDNEY: Germany’s Carl Benz might have invented the automobile, but it’s the United States that got us to drive them.
The relentless export of American cars and car culture put the world on the road in the 20th century. By the 1960s, Ford Motor had plants in almost every major European country, as well as Argentina, Brazil, Egypt, India, Israel, Peru, Pakistan, South Africa, Turkey, and Zimbabwe.
Right now, it’s passing that baton to China with barely a fight.
The US car industry that emerges will be smaller, less influential – and, eventually, less profitable and financially sustainable.
The immediate question is over the fate of General Motors’ (GM) Chinese units, mostly joint ventures (JVs) with SAIC Motor. That company, controlled by Shanghai’s city government, is best-known internationally for reviving the storied British MG brand with a range of affordable, export-oriented sports utility vehicles (SUVs) and hatchbacks.
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.
“It’s a difficult market right now,” chief executive officer Mary Barra told investors in July. “Very few people are making money.”
Chevrolet sales have fallen off a cliff, and are likely to end the year barely scraping 10 per cent of the level they were at in 2019. Cadillac isn’t doing much better.
Even Buick – which in China has substantial brand cachet as the chosen marque of independence leader Sun Yat-Sen and Mao’s longtime premier Zhou Enlai – is barely keeping its head above water.
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.
