Meeting the ‘China speed’ challenge in the US auto market

A plethora of Chinese OEMs have been gaining traction within their domestic market, increasing from 50% to 67% light vehicle (LV) market share from 2022 to 2025. But with manufacturing overcapacity and weakening demand at home, some OEMs are pushing an export strategy aimed at several global markets. Outside China, Chinese OEMs’ LV share has risen from 2.1% to 6.2% over the same three-year period, with the biggest regional gain coming from Eastern Europe (4.5% to 22.6%), where local production and dealer networks are expanding to sustain long-term growth. Overall, the speed with which Chinese OEMs are executing their growth expansion strategies has been highly disruptive for manufacturers operating in those target markets.

Most of the improvements that could help address differences in cost and speed aren’t only within incumbent OEMs’ control—they’re likely already being embraced and partially implemented. In addition, industry executives interviewed suggest adopting practices that shorten production cycles from 48 to 24 months could potentially save traditional OEMs around $200 million to $600 million per vehicle program.

Traditional automotive manufacturers may not be able to take a wait-and-see approach to addressing the growing challenges presented by their China-based OEM competitors. Structural and operational change will likely be needed to prioritize digital-first product development, leveraging cost as a design constraint, and end-to-end manufacturing automation while maintaining the quality and value consumers expect.

Traditional OEMs should consider working together to share the costs of product development for interchangeable components and platforms that don’t impact brand differentiation or consumer preferences. If these systems are transformed for greater efficiency and cost savings, traditional OEMs may be better positioned to face market newcomers head-on.