US carmakers remain ambitious about Chinese market

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05:29

How are American automakers faring in the China-US trade war? Peter Fleet, Asia-Pacific president of Ford Motor said their ambition is to increase revenue by 15 percent by 2025.

Ford has lost one billion US dollars in profits from tariffs on metals imported to the US. That's why the company is moving against market headwinds by expanding partnerships and production in China. Fleet said Ford, together with Zotye, will test the waters of electric vehicles.

The next year is critical for the automaker's China sales, said Zhu Wenbin, sales director of Shanghai Yongda Tongbao, a Ford dealer, who is excited that new Chang-An Ford models will come to the Chinese market this year and in the first half of next year.

"They will beef up our sales. Our annual sales target has always been one million cars a year for Chang An Ford," He said.

It seems the impact from the trade war on consumers can be buffered for the time being. Zhu said actual sales of imported cars are not affected since the price gains due to tariffs are written off by Ford China, but if the trade war continues to worsen, the price increases will be too much for Ford to cover.

Meanwhile, Tesla has also secured a location for its new Shanghai factory, which is critical to overcome supply issues. Alex Xie from consulting firm BCG said automotive manufacturing is already automated, meaning it doesn't cost too many jobs in the US by having Chinese factories.

"So moving the whole factory back to the US and then transporting cars to China does not really make sense."

"The American cars have strong local partners in China, helping them better understand what customers want, how to work with government to create new products, new technologies. So, in autonomous driving, in connectivity, China provide good place to test all things like that," Xie said. "Right now they are actually earning more money from China than anywhere else."

Auto technology, especially artificial intelligence (AI), is a major global development trend. Christopher Thomas, partner of McKinsey, sees huge room for the growth of autonomous vehicles.

"The opportunities for AI powered cars, which we call autonomous vehicles. by 2030, would be at least 500 billion US dollars, including the sales volume of new cars and the volume of market services on top of it."

Xie also pointed out if auto makers want to stand out in China's market, it is essential to work closely with Chinese partners and make efforts in localization, including the localization of supply chain, design, and meeting the needs of local customers.