In the face of China's strong offensive, Detroit is indeed having a hard time. China's global expansion is undoubtedly an unprecedented challenge for Detroit's automakers. Therefore, they must quickly adapt to the new market environment and find an effective competitive strategy, otherwise they may follow in the footsteps of Kodak and Blockbuster and gradually disappear into the market wave.
When we mention Detroit, we're actually talking about traditional American automakers and the entire industry they represent. Detroit isn't just a place name, it's become a symbol of the time-honored automotive giants with a wealth of manufacturing experience and technical prowess.
These manufacturers, such as General Motors, Ford, and Chrysler, have led the way in the global automotive industry and created countless remarkable moments. However, as the global automotive market continues to change and emerging technologies evolve rapidly, the traditional automakers represented by Detroit are also facing unprecedented challenges.
They must revisit their product strategies, market positioning, and technology roadmaps to adapt to increasingly stringent environmental regulations, changing consumer demands, and intense competition from emerging markets. In this process, the traditional automakers represented by Detroit need to show greater courage and determination to break new ground and innovate.
Detroit, cornered
China's strength should not be underestimated, and in 2023, China will successfully surpass Japan to become the world's largest exporter of automobiles. Behind this achievement is the precise grasp of the global market and the strong production capacity of Chinese automakers. In addition to delivering nearly 5 million vehicles to more than 120 markets around the world, it has also established an extensive sales and production network in Mexico, Brazil, Thailand, South Africa and other places.
Major Chinese automakers such as BYD and SAIC have taken over idle factories in several countries and set up new production bases in strategically important regions such as Hungary and Indonesia.
In the field of electric vehicles, China's advantages are even more significant. Its production of electric vehicles and batteries has far surpassed that of the United States, reaching as much as 10 times that of the latter. Chinese companies such as BYD are amazingly efficient and innovative in the production of electric vehicles, and can produce a large number of high-quality electric vehicles in a short period of time, meeting the global demand for environmentally friendly and energy-efficient models.
However, in stark contrast to China's boom, Detroit's automakers are gradually withdrawing from the global market. Over the past decade, well-known brands such as General Motors, Ford and Jeep have scaled back their overseas operations and shifted their focus to the U.S. domestic market. While this practice has protected their local market share to a certain extent, it has deprived them of the opportunity to compete with Chinese companies in the global market.
In fact, China has an ambitious plan for growth and profits, and ** is moving steadily according to that plan. Detroit's automakers face a huge challenge. Jeep has withdrawn from the Chinese market, and Ford and GM have seen their sales plummet, making even worse profits.
If they do not adjust their strategies in time and actively respond to the competition of Chinese companies, the likelihood of exiting the Chinese market in the next five years will increase significantly.
This is exactly what Sun Tzu said in the Art of War: "Know yourself and know your opponent, and you will not be defeated in a hundred battles". In this globalized market, Detroit's automakers must be aware of their own situation, have a deep understanding of the competitive strategies and market dynamics of Chinese companies, and formulate effective countermeasures to remain invincible in the fierce market competition.
Chinese automakers have been able to rise rapidly on a global scale precisely because they have a deep understanding of themselves and a thorough study of their competitors. They know that their advantages are in the best and what their opponents' weaknesses are, so they can develop an effective competitive strategy and quickly occupy market share.
Detroit's automakers, by contrast, don't seem to be doing just that. They don't know much about Chinese automakers, if not very little. This information asymmetry makes them feel helpless in the face of competition from Chinese companies, and they are unable to develop effective response strategies.
At the same time, Detroit automakers have certain problems with their perceptions. They seem to be too obsessed with the glory of the past and do not realize that their position in the global market has changed dramatically. They were once the leaders of the global automotive industry, but now they are at risk of being overtaken by Chinese and other national automakers.
Detroit's automakers are in large part in a matter of their own characteristics. In the past glory, they have formed an inherent mode of thinking and production, which is difficult to adapt to the new market environment and competitive situation. They excelled at building large pickup trucks and SUVs and made a good profit from them.
But this product mix is no longer able to meet the changing needs of the global market, especially in areas such as electric vehicles, batteries, autonomous vehicles and software, and Detroit automakers are significantly lagging behind their competitors in other countries.
In order to compete with the Chinese, Detroit automakers must re-examine their product mix and market positioning, adjust their strategic direction, increase investment in areas such as electric vehicles, batteries, autonomous vehicles and software, and accelerate the pace of product upgrading to meet the changing needs of the global market.
At the same time, they also need to have a deep understanding of the competitive strategies and market dynamics of Chinese and other automakers, and develop effective countermeasures to cope with the increasing competition in the global market.
A bold plan idea
In recent years, Detroit has made a series of efforts to learn how to develop electric vehicles, batteries, self-driving cars, and software, but the results have been disappointing. They have spent billions of dollars in money and manpower, but they have achieved little. There are many reasons for this, but the most important one is that they don't really recognize themselves and the needs of the market.
They just blindly follow the trend and do not find their core competitiveness and market positioning. Therefore, these attempts of theirs ended up being just a farce of wasting resources and time. In the face of a strong offensive from Chinese automakers, Detroit must act immediately and develop a battle plan that is both bold and realistic.
It's not just about the future of Detroit, it's about the fate of the entire U.S. auto industry.
Michael Dunne, CEO of Dunne Insights, suggests that Chinese automakers are plagued by overcapacity and bloody battles at home. They need to enter Europe and the United States to be profitable. Detroit and Washington should continue to impose high import tariffs on Chinese-made cars. No one likes tariffs, but protections will buy time for Detroit.
When it comes to large pickup trucks and SUVs, Detroit has an unbeatable advantage. Brands such as the Ford F-150, Chevrolet Silverado, RAM and Jeep have amassed some of the world's most loyal customer bases. To further strengthen this advantage, Detroit should build closer partnerships with dealers, merchants and financial companies to deepen the emotional connection between U.S. auto brands and consumers.
This connection is not only the foundation of brand loyalty, but also the lifeblood of Detroit's future growth.
At the same time, Detroit needs to focus on the low-to-mid market, especially the product line under $30,000. This market is a potential breakthrough for Chinese automakers. By introducing more models that fit into this range, such as the Ford M**Erick and Chevrolet Trax, Detroit can effectively deter the invasion of Chinese brands and appeal to a wider consumer base.
Michael Dunne believes that Detroit does not need to rush when it comes to the construction of electric vehicles and battery chains. It took China more than a decade to reach its current level of electrification, and Detroit has time to make steady progress. As the battery chain continues to evolve, Detroit can focus on another key area of differentiation: software-defined vehicles.
Software-defined vehicles are the future development trend of the automotive industry. With software updates, automakers can continuously improve the user experience by adding new features to their vehicles without changing the hardware. Detroit has deep technical accumulation and market experience in this field, and should make it a key direction for future development.
To regain leadership in the fierce competition of the global automotive industry, Detroit must adopt a bolder and forward-thinking strategy. It's not just about meeting the current challenges, it's about ensuring a strong position in the industry landscape of the future. Detroit, for example, should consider establishing a presence near leading electric car makers such as Tesla and BYD.
This is not only about being geographically close to competitors, but also about directly participating in and influencing the innovation ecosystems of these leading companies. Setting up an R&D center next to Tesla's factory in Austin, Texas, or working alongside BYD in Shenzhen, China, will help Detroit get faster access to the latest industry information and technology developments.
Going further, Detroit's automakers could try to buy a stake in a Chinese electric car maker. The strategy will draw on Volkswagen's investment model in Xpeng Motors, quickly enter the Chinese market through capital partnerships, and leverage the resources and networks of local Chinese companies to accelerate its own electrification and intelligent transformation.
The bottom line is that Detroit must dig deep and rediscover that determination to win. When faced with seemingly impossible goals, Detroit should recall the success stories of Hyundai and Kia. The two South Korea-based brands, based in a country smaller than Michigan, compete and win in the global market. Why can't Detroit?
Now, Detroit faces an existential moment. It can choose to continue to defend its shrinking positions, eventually fading out of sight; It is also possible to choose to understand that this is a turning point, a moment when the offensive must be renewed. If Detroit chooses the latter, it will have to take immediate and decisive action to take its place in the future of the global automotive industry.