When I’ve traveled in Latin America over the past couple of years, cars made by Chinese companies were to be seen everywhere, and I imagine they’re even more prevalent there now. It was clear that China had made a lot of inroads in that regional market.
Conversely, U.S. automakers are losing ground on sales to Chinese consumers.
China is also producing cars outside of Asia. Its Chery Automobile plans to start manufacturing in Spain, for instance. And while Chinese automakers haven’t yet established plants in Mexico, which could give them North American free-trade benefits, they’re eyeing it. Meanwhile, Chinese auto parts suppliers have carved out manufacturing presences south of the border.
Chinese carmakers also surpassed U.S. rivals in sales last year, according to one report.
So it’s no surprise that the Biden administration has been taking steps the past couple of years to curtail China’s role in the U.S. automotive sector. Reuters reported this spring that under U.S. pressure, Mexico has declined to offer China government incentives to produce electric vehicles there.
But the administration just temporarily delayed enforcement of a rule that required EV materials to be sourced from countries outside China and other “foreign entities of concern.” U.S. automakers now don’t have to comply with the rule until 2027.
U.S. automotive industry advocates praised the reprieve, saying it gives automakers time to comply and consumers the benefit of tax credits tied to the rule, incentivizing EV purchases, which have flagged in recent months.
The U.S. mining industry, meanwhile, said the delay would give China more sway in the EV market, since it has a corner on key EV battery material sources.
However this global rebalancing pans out, the “sleeping giant” is no longer so sleepy and certainly can’t be ignored. So it will pay for U.S. automakers and auto dealers to be at the top of their games to maintain and build on sales, however they can find advantages.
Hannah Mitchell is executive editor of F&I and Showroom. A former daily newspaper journalist, her first car was a hand-me-down Chevrolet Nova.
