American Auto’s Retreat From China Accelerates as GM and Ford Both Pull Back
General Motors Co (NYSE:GM) is abandoning one of the most storied American automobile brands in the world's largest auto market, and Ford Motor Company (NYSE:F) announced a different kind of pullback. Together, the two moves demonstrate how much American manufacturers have lost their foothold in China.
According to a report in German trade publication Automobilwoche, General Motors Co (NYSE:GM) plans to stop Chevrolet sales in China after nearly 21 years. The figures driving the decision are stark: Chevrolet sold over 767,000 vehicles in China in 2014, its peak year. Last year, that figure had fallen to less than 9,000 units, a 98.8% decrease in just over a decade. GM's answer has been to double down on its two surviving, more successful Chinese brands, focusing on Buick and Cadillac, with Buick specifically finding success with its new Electra electric vehicle series.
Chevrolet's decline is a symptom of a broader fundamental instability. Foreign automakers' overall share of China's auto market has plummeted, dropping from 53% to around 33% in just two years, while local Chinese companies led by BYD and Geely have taken control.
Ford's version of the retreat, announced on August 13, focuses on Lincoln, its luxury brand. Ford announced that beginning in 2030, it will stop producing Lincoln vehicles in China for the US market and instead expand Lincoln manufacturing domestically. The move notably targets the Lincoln Nautilus, the brand's best-selling model and the only car Ford Motor Company (NYSE:F) currently makes in China for American buyers, manufactured at the Changan Ford joint venture in Hangzhou since 2024.
CEO Jim Farley described the move as a statement of identity as much as strategy, claiming that Lincoln is an American brand and Ford Motor Company (NYSE:F) is America's automaker, telling Reuters that the decision was prompted by the Trump administration's trade policies. Those policies are doing the majority of the work here. The China-built Nautilus is subject to a significant 52.5% tariff in the US, a cost that has become difficult to justify. Despite the fact that the SUV has held up fairly well commercially, its US sales are down only 5.7% year-over-year through July, a smaller decrease than the Lincoln brand overall (down 12.6%).
With Lincoln's retirement from China-based US production and Chevrolet's complete exit from Chinese retail, the two automakers are coming to the same conclusion from different angles: the economics of building in China for the US or selling in China at all, are becoming increasingly difficult. Interestingly, neither company's China strategy represents a complete exit. General Motors Co (NYSE:GM) recently extended its SAIC joint venture until 2047, doubling down on Buick and Cadillac with plans to produce at least 30 new energy vehicles domestically by 2030, even as it quits Chevrolet retail and reshores Envision production.
The timing adds another layer: China's domestic auto market has now seen nine consecutive months of falling sales, despite a boom in Chinese automakers' export volumes. The combination of a declining domestic market and aggressive foreign expansion by Chinese companies is squeezing American automakers in both ways, costing them share within China while Chinese rivals expand on countries in Europe and South America.
Institutional holdings in General Motors Co (NYSE:GM) fell slightly from 81 funds in Q4 to 77 funds in Q1, while Ford Motor Company (NYSE:F) saw hedge fund ownership fall from 52 to 50 funds. Short interest levels are low, 2.29% for GM and 2.20% for Ford, indicating limited bearish positioning.
Core stock investors could view the strategic downsizing as potentially positive for long-term margins. Ending unprofitable retail channels in China, such as Chevrolet, and eliminating 52.5% tariff burdens on reshored vehicles like the Nautilus, helps General Motors Co (NYSE:GM) and Ford Motor Company (NYSE:F) could help protect corporate free cash flow while investing capital on high-margin domestic light trucks, hybrid systems, and specific premium EV markets.
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