Just a decade ago, foreign automakers were planning for China’s huge and growing auto industry to become a second pillar of profitability, alongside North America, to support long-term growth.
Unfortunately, China’s automotive market pushed the boundaries of electric vehicles (EV) more quickly than anticipated, creating a market that was about 50% new energy vehicles, and a market that foreign automakers like Ford Motor Company (NYSE: F) He struggled to compete.
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When life gives you lemons, you know what to do, and Ford is leading the way.
Many investors who follow the auto industry understand that China’s auto industry has been caught in a brutal price war, driven by an influx of competitors trying to gain a foothold in the growing electric vehicle market. That said, more data is coming in that emphasizes how brutal this price war has been on earnings.
More than half of China’s car dealers became unprofitable just last year, and 56% of dealers posted losses in 2025, up from 42% in 2024, according to the China Automobile Dealers Association. However, when you take into account the number of dealerships that simply break even, the situation looks even worse: only 24% of dealerships in China report a profit. The price war has forced 82% of dealers to sell new vehicles at prices below wholesale prices, an unsustainable metric.
With the price war showing no signs of abating anytime soon, automakers have been forced to shift gears, and quickly.
As foreign automakers struggle to compete with domestic rivals in China, many have begun turning the country into an export hub for low-cost vehicles, sometimes partnering with local producers to ship outbound vehicles with some of China’s latest software and technology. Ford is one of the leaders in this gear change.
In fact, just a year ago, Ford CEO Jim Farley gave investors a sense of what a difference the shift in priorities has made. After six consecutive annual losses in China, its operations turned a profit in 2024. While Ford long ago stopped being as transparent with data outside of China, it’s not too difficult to see what helped this profit increase. In 2024, Ford’s exports from China rose 60% to about 170,000 vehicles, compared with its wholesale deliveries with the Changan Automobile Co. joint venture that rose just 6% to 247,000 vehicles.