As recently as a decade ago, foreign automakers were planning on China's massive and growing automotive industry to turn into a second pillar of profitability, standing next to North America, to support long-term growth.
Unfortunately, China's automotive market pushed the boundaries of electric vehicles (EVs) more quickly than anticipated, and created a market that was roughly 50% new-energy vehicles -- and a market that foreign automakers such as Ford Motor Company (F 0.78%) struggled to compete in.
When life gives you lemons, you know what to do -- and Ford is leading the charge.
Lots and lots of lemons
Many investors following the automotive industry understand that China's auto industry has been stuck in a brutal price war, driven by an influx of competitors trying to carve out their niche in the growing EV market. That said, more data is coming in that emphasizes just how brutal this price war has been on profits.
Image source: Getty Images.
More than half of China's car dealerships became unprofitable just last year, with 56% of dealerships booking losses in 2025, up significantly from 42% in 2024, according to the China Automobile Dealers Association. However, when accounting for the number of dealerships merely breaking even, it looks even worse, with only 24% of dealers in China reporting a profit. The price war has forced 82% of dealerships to retail new vehicles at prices below wholesale, an unsustainable metric.
With the price war showing no signs of abating anytime soon, automakers were forced to switch gears, and quickly.
Making lemonade
With foreign automakers struggling to compete with domestic rivals in China, many have begun to switch to turning the country into a low-cost vehicle export hub, sometimes partnering with local producers to send outgoing vehicles with some of China's latest software and tech. Ford is one of the leaders in this shifting of gears.
In fact, just about a year ago, Ford CEO Jim Farley gave investors a glimpse at the difference the shift in priorities has made. After six straight annual losses in China, its operations turned a profit in 2024. While Ford long ago stopped being as transparent with data out of China, it's not too difficult to see what helped this profit boost. In 2024, Ford exports from China surged 60% to roughly 170,000 vehicles, compared to its wholesale deliveries with joint venture Changan Automobile Co. rising only 6% to 247,000 vehicles.
NYSE: F
Key Data Points
At the end of the day, it's unfortunate for long-term investors that China is highly unlikely to ever become the second pillar of global profitability for automakers. The silver lining is that Ford has been able to not only shift gears to exports and turn around losses, but it was one of the first automakers to pioneer this strategy. This is helpful for long-term investors because it buys Ford time to become more competitive with EV development and costs, which it could gain from valuable partnerships in the country.
Hopefully, one day Ford can boast a rebound in its domestic China sales, but until then, exports are turning around losses and turning lemons into lemonade.
