The Ongoing Collapse of the Western Car Industry, by Roger Boyd, Jan 2025

[aja8888]

This is a long article outlining how this subjective collapse will (could) unfold over 2+ years going forward. It essentially describes, by country and geographical region, how the Chinese will aggressively work their way into foreign car markets with their plethora of excellent EV's (and some hybrids) and take significant market share. The bottom line is that U.S. (and Japanese/German auto manufacturer's) will "take it in the neck" while all this unfolds. In essence, the U.S., with tariffs imposed on Chinese auto manufacturers will become an "Island" of sorts with a slowly growing EV market, a robust hybrid auto market and a continuation of ICE models.

This is a short summary of Part 1 of the article. Part 2 & 3 are linked in part 1.

Note: in the article, there are several links to U Tube videos that are done to evaluate the various EVs that most of us have never heard of. No need to watch these unless you are interested.

The Ongoing Collapse of the Western Car Industry: Q1 2025, Part 1

This piece became a bit of a sprawling lengthy one so I decided to split it up into three pieces, to aid both my editing and your reading.

rogerboyd.substack.com

What happens in Asia+Australasia will decide the fate of the major car manufacturers. In 2024, the Chinese EV market represented more than two thirds of the global EV market, as EVs took a more than 50% share of the largest car market in the world (25 million yearly sales). VW and Toyota managed to limit their drop in sales to about 10% by taking a bigger share of the shrinking Chinese internal combustion engine vehicle (ICEV) segment, while General Motors and Honda sales collapsed by around 25%, Nissan by 15%, BMW and Audi (part of the VW group) by nearly 20%. With the ICEV segment shrinking again in 2025, to possibly only 30% of the Chinese car market, VW and Toyota will not be able to repeat that performance. And the pain will be even worse in 2026; VW and Toyota may be the only sizeable foreign brands left in the ICEV segment, but that segment will be much smaller by the end of 2026. At the same time, the fight for that shrinking segment will intensify - driving out any profitability.

ASEAN markets such as Indonesia and Thailand are also rapidly growing (and the Western car brands are also being pushed out of there by the Chinese), and India (currently dominated by Suzuki, Hyundai, Tata and Mahindra) has a huge potential for cheaper mass market models. It will be interesting to see if the thaw in China-India relations stretches to the significant entry of Chinese car manufacturers into India, something India desperately needs to help develop its automobile manufacturing supply chain; especially for EVs. Without a presence in the Asia+Australasia market, manufacturers will become regional at best players without the scale and ecosystem efficiencies of those that do have such a presence. Without a presence in China they will be continuously left behind by the rapid changes in a market that represents the leading edge, and two thirds, of the global EV market.

The South Korean and Japanese markets are protected by many “non-tariff” barriers, with the former at 1.7 million sales and the latter at less than 5 million sales. The EV share of both markets is extremely low. Although this may change as the Chinese brands are starting to sell EVs in both South Korea and Japan; creating disruption for the South Korean and Japanese manufacturers even in their home markets. Both countries are already high income nations with rapidly ageing and diminishing populations with the future reality of stagnation at best. Both are dominated by the national car makers, Hyundai-Kia in South Korea and Toyota, Honda, Nissan, Subaru, Mitsubishi etc. in Japan. These car makers are dependent upon much larger overseas sales to maintain financial viability.

The US market of just under 16 million sales is dominated by trucks and SUVs, and together with the distances driven (public transport is nearly non-existent) this places a significant limitation on the speed of EV adoption. Even with significant federal and state fiscal support the US BEV market only grew by 10%, to reach a share of 8.5%, in 2024. With the prospect of the Trump administration removing all federal fiscal support, combined with the Biden-administration imposed 100% anti-China EV tariff, the prospects for the EV market in the US are dim. The US is in danger of turning into an ICEV island left behind by the rest of the world, with a relatively stagnant level of sales.

The European car market at 13 million sales is also stagnant, with the move to EVs losing most of the state fiscal support that it previously had; EV sales in Europe actually fell in 2024 with an EV market share of 23%.........................

 

[Koolau]

Well, it's no secret that China would like to dominate not only the EV industry but world industry as a whole. Whether "we" (and the rest of the world) allow that or not is not yet known.

How do we use this information? I'm not too concerned about it at my age - except perhaps for my kids future.

 

[aja8888]

Well, it's no secret that China would like to dominate not only the EV industry but world industry as a whole. Whether "we" (and the rest of the world) allow that or not is not yet known.

How do we use this information? I'm not too concerned about it at my age - except perhaps for my kids future.

Did you read the article? There appears to be no way to slow it down, given the aggressiveness of the Chinese. My point of the article is to show the car fans here what's going on around the world in this regard. Quite interesting.

 

[marko]

IMO, nothing like competition to drive some innovation, better product and lower prices. Remember around the 70s when US cars weren't up to par with the Japanese? What did we get? Better, more reliable cars out of GM, Ford et al....eventually. Until then we were convinced that Japan would herald the end of US car makers.

Worst case: we get some good Chinese cars at a decent price. Just one man's (who's driven only Mercedes for 40 years) opinion.

Reality will set in at some point and we'll figure it out.

 

[Koolau]

I skimmed it and am not surprised by its implications. China wants to dominate world manufacturing - especially the car industry. Given a free hand they will likely do that. My question is whether the rest of the world - and especially the USA will roll over for it.

There is no such thing as "inevitable" when it comes to something this big. IOW the USA and Japanese and Europeans and everyone else just might finally get their act together and compete with the Chinese. It will take some leadership, but it could happen.

 

[aja8888]

I skimmed it and am not surprised by its implications. China wants to dominate world manufacturing - especially the car industry. Given a free hand they will likely do that. My question is whether the rest of the world - and especially the USA will roll over for it.

There is no such thing as "inevitable" when it comes to something this big. IOW the USA and Japanese and Europeans and everyone else just might finally get their act together and compete with the Chinese. It will take some leadership, but it could happen.

What we are doing here in the U.S. is imposing a 100% tariff on Chinese cars. And we have not let them build any assembly plants here. Pretty much, that's all we can do. If you read all three parts of the long article, you will see the aggression of the Chinese and their planned (and current) moves into South America and other geographical regions.

The real eye opener of the article is what is projected to happen to all the other car companies during this period. Some will go away, some will get smaller and some will (maybe) JV with another. That's kind of going on right now with Nissan, although that has fallen on its face right now.

 

[Pointby2]

We spent a few weeks in China last year. It was amazing to see all of the different car manufacturers. I guessed there might be over 50. Then I looked it up,

There are around 150 active Chinese car brands, including 97 domestic brands and 43 joint venture brands.

 

[Koolau]

Once again, maybe I'm the only one who finds none of this particularly surprising. The Chinese want to dominate the car industry (among others). Surprise, surprise.

The question is what are we gonna do about it. Tariffs are sort of a "recognition" that we now "recognize" the issue. I guess that's a start. I mentioned leadership.

If I ruled the world (I think there is a Tony Bennett song about that) I'd be aligning with the rest of the world against the Chinese (economically) but I'm not all that smart so YMMV.

 

[marko]

Just my opinion: Not surprising but also not particularly alarming. I've spent a lot of time working in China and I'd give them an "A+" for planning but very often a "C-" in execution.

The Chinese often joke that "the best day of any business is the first day it opens, and it's all downhill after that".

What does concern me is not the automotive business as much as the soft businesses like AI, finance, political influence (with us and our adversaries) and, of course Taiwan.

Car companies come and go...Saab, Studebaker, AMC, Packard to name just a few. Adapt, compete or die.

Regardless of where you stand, the Chinese recognize that there is a new political environment as well and I'd imagine that they've had to reshape their strategy to some degree.

 

[Car-Guy]

I just skimmed a little bit of "part 1" of the series but, I'll read more later:

I'm not sure where the world car market is going (and of course I'm just guessing at the US market) but I think with the new energy policies coming on line now, the EV market will be slow to grow here in the next 4 to 12 years . Those in the US that wanted EV's, have them for the most part. The US may well become an ICE island in the world. As the rest of the world develops the EV (battery) technologies, I suspect it will find it's way into the US market more and more but until there is a major break through, I'm guessing it will be slow. Also, I suspect the Boomers who grew up with ICE won't be as quick to switch as the younger generations will. Soooo, in the next 10 to 20 years, when most of the Boomers are either dead or not driving much anymore and EV technology improves and the support infrastructure reaches critical mass, EV's will become mainstream here is the US too. It would be interesting to see how quickly the US transitions to EV's then. But, I won't be here to see it.

For now I'm happy getting ~12mpg on my supersized truck and filling up it's 33 gallon tank just about "anywhere" in ~5 minutes.

 

[aja8888]

I just skimmed a little bit of "part 1" of the series but, I'll read more later:

I'm not sure where the world car market is going (and of course I'm just guessing at the US market) but I think with the new energy policies coming on line now, the EV market will be slow to grow here in the next 4 to 12 years . Those in the US that wanted EV's, have them for the most part. The US may well become an ICE island in the world. As the rest of the world develops the EV (battery) technologies, I suspect it will find it's way into the US market more and more but until there is a major break through, I'm guessing it will be slow. Also, I suspect the Boomers who grew up with ICE won't be as quick to switch as the younger generations will. Soooo, in the next 10 to 20 years, when most of the Boomers are either dead or not driving much anymore and EV technology improves and the support infrastructure reaches critical mass, EV's will become mainstream here is the US too. It would be interesting to see how quickly the US transitions to EV's then. But, I won't be here to see it.

What's hurting EV adoption in the U.S. (versus the rest of the world) is high vehicle prices (due to labor costs and battery import costs), a large footprint of a country (charging infrastructure limitations) , import tariffs on Chinese cars and batteries, and slow to develop EV models by legacy companies (Ford, GM, Stellantis (now Italian owned),

There is also the situation with older drivers who want to stay with ICE. As an example, many of my ROMEO group, who could easily afford any EV (two of us have them) are dead set against getting one.

GM and Ford are already pretty much out of Europe and soon China (GM). There will be some bad days for those two companies when they have to absorb the heavy losses incurred over both U.S. and non-US shutdowns. Ford has been eating big losses already since it split the ICE/hybrid cars off from EV and reported financials for each sector. GM has been better off as earnings have been positive, but market share has been going down each year.

 

[Gumby]

Interesting report. Thanks for posting it.

 

[Chuckanut]

Doesn’t China burn mostly coal to make the electricity to fuel the new EVs?

 

[Al18]

Part 1 reads more like marketing. There’s not a chance the US market will switch to EV in 2 years. The electrical grid won’t support and I don’t see current politicians doing a 180 to support it. Ford voluntarily stopped making all cars in 2023, except for the Mustang. I believe this was because the profit margin on trucks and SUVs was higher.

 

[Gumby]

Doesn’t China burn mostly coal to make the electricity to fuel the new EVs?

Useful link to compare percentage of electricity generated by coal by country in 2023

China is 61%, India is 75%, US is 16%.

Share of electricity production from coal

An interactive visualization from Our World in Data.

ourworldindata.org

 

[aja8888]

Burning coal is not bad as long as you burn low sulfur coal and use high efficiency scrubbers in your exhaust stacks. I doubt if China and India do this on their coal fired generation facilities, but they are not as environmentally pro active as the U.S. (we all know this).

 

[Qs Laptop]

This is (apparently) the thesis statement of the article:

What happens in Asia+Australasia will decide the fate of the major car manufacturers.

I'm not buying it. According to the graphic at the beginning of section 1 of the article, Chevy had 9% of their overall sales in 2023 in China and Asia; Ford had 11% of their overall sales in China and Asia. Stats weren't given for Stellantis (Chrysler/Dodge/Ram/Jeep/Fiat/Alfa Romeo) but I'd guess their sales are about the same as Ford and Chevy in Asia/China. Essentially, Ford, Chevy, Chrysler don't give a rip about Asia and never have. We're already an "island."

Will China aggressively move into foreign car markets with their EV's? Yes. Will it be the end of the Western car industry? No.

 

[Midpack]

The variable the article may be leaving out is robotaxis or the like - owning a car may not be as much of a given in 10-20 years. Like other factors it may not happen quickly, but if robotaxis actually work, more people will decide they don’t need to own a car. Older generations will resist more, but cars are getting more and more expensive, new or used. Robotaxi owners will buy whatever makes the most profit, EVs, ICE or a mix. At any rate, there may be some big surprises to come, for everyone including China.

 

[aja8888]

The variable the article may be leaving out is robotaxis or the like - owning a car may not be as much of a given in 10-20 years. Like other factors it may not happen quickly, but if robotaxis actually work, more people will decide they don’t need to own a car. Older generations will resist more, but cars are getting more and more expensive, new or used. Robotaxi owners will buy whatever makes the most profit, EVs, ICE or a mix. At any rate, there may be some big surprises to come, for everyone including China.

It's possible, for sure, but a big surprise may be that many people will not want robotaxies and will want their own cars to be able to go where they want when they want. Not saying there won't be robotaxies (Wamo right now, GM Cruise dead in the water) but I doubt there will be wide use of them (my personal opinion). I wouldn't want to be reliant on one, but I am just an old slug with an electric car. My 44 year old daughter, who is very tech savvy, likes her Mustang GT and I couldn't talk her into a Tesla last year.

Who knows?

The article probably left "potential" robotaxies out intentionally as they are not a realistic vehicle for 2025 - 2026 as that's the time frame of the article is all about.

 

[GrayHare]

Burning coal is not bad as long as you burn low sulfur coal and use high efficiency scrubbers in your exhaust stacks.

Actually, sulfur particles are best not scrubbed because they have a cooling effect. Warming began in earnest when sulfur started to be scrubbed due to various clean air laws. Sulfur has other negative effects but those are now of relatively less concern than warming.

 

[marko]

Part 1 reads more like marketing. There’s not a chance the US market will switch to EV in 2 years. The electrical grid won’t support and I don’t see current politicians doing a 180 to support it. Ford voluntarily stopped making all cars in 2023, except for the Mustang. I believe this was because the profit margin on trucks and SUVs was higher.

Could be, but I seem to recall that trucks were excused from the more stringent mpg regulations or at least had more leeway. Ford and others started to push pickups instead of sedans as a workaround.

 

[Koolau]

Actually, sulfur particles are best not scrubbed because they have a cooling effect. Warming began in earnest when sulfur started to be scrubbed due to various clean air laws. Sulfur has other negative effects but those are now of relatively less concern than warming.

Right, and supposedly the CO2 (which coal is virtually all converted to) is the real culprit in greenhouse effects. Oil is a bit better and nat gas is even better (both due to their hydrogen content). Per amount of heat produced, coal produces the most CO2. Apparently, the Chinese are not concerned about CO2 production.

More off topic: There have actually been proposals to produce SO2 at high altitude (perhaps burning sulfur or high sulfur fuel in aircraft) to block out some of the sun's infrared radiation. We know it w*rks because a good amount of the warming in the past 25 or 30 years is because we have cleaned up the SO2 by requiring low sulfur fuels.

 

[JBTX]

Useful link to compare percentage of electricity generated by coal by country in 2023

China is 61%, India is 75%, US is 16%.

Share of electricity production from coal

An interactive visualization from Our World in Data.

ourworldindata.org

They aren’t there yet in actual usage but by now in terms of capacity fossil fuels represent less than half of capacity. And green energy in China is growing rapidly.

How China Became the World’s Leader on Renewable Energy

China has achieved stunning growth in its installed renewable capacity over the last two decades, far outpacing the rest of the world. But to end its continued dependence on fossil fuels, it must now move ahead with planned reforms to its national electricity system.

e360.yale.edu

When the International Energy Authority issued its assessment of the pledge to triple renewables globally by 2030, it pointed out that the 50 percent increase in global renewable installations in 2023 was largely driven by China. In 2022, China installed roughly as much solar photovoltaic capacity as the rest of the worldcombined, then went on in 2023 to double new solar installations, increase new wind capacity by 66 percent, and almost quadruple additions of energy storage.




My question is what China looks like in 10-20 years. They are experiencing an extreme demographic bust as well as a debt bubble.

 

[Out of Steam]

Well, it's no secret that China would like to dominate not only the EV industry but world industry as a whole.

China already dominates world industry as a whole. The fact that the items we buy are still labeled familiar Western and Japanese brand names is just for show.

 

[mf15]

The collapse of the American car industry I believe started about 1950. Where the Japanese embraced statistical quality control, via Edwards Deming. So I blame it on Six Sigma. LOL