Recently, Bank of America analysts suggested that Detroit automakers General Motors (GM), Ford (F), and Stellantis (STLA) should exit the Chinese market as soon as possible and concentrate on the U.S. market. John Murphy, a top-rated BofA auto analyst, stated that this move makes sense strategically because it’ll allow the companies to focus on where they are currently profitable—North American trucks.
GM, which once thrived in China with its Buick brand, saw sales plummet to 2.1 million vehicles in 2023 and reported a loss of $106 million in the last quarter.
Murphy also highlighted that Ford and Stellantis have struggled to gain a sustainable market share in China, as they sold 30 million vehicles last year. He believes that continued financial losses in China will deplete these automakers’ resources. Instead, he advises that they should redirect their focus towards developing competitive EV line-ups against Tesla (TSLA). Murphy emphasized that China is no longer a core strategy for GM, Ford, or Stellantis during a presentation at the Automotive Press Association event.
It’s worth noting that, so far, Murphy has enjoyed a 58% overall success rate on his calls, with an average return of 11.3% per rating.
Which Auto Stock Is the Best Buy?
Out of the aforementioned firms, Wall Street analysts believe that STLA stock is the best auto stock to Buy. In fact, they expect the price to increase by 40% from current levels to $28.56 per share, as pictured below. Interestingly, professional money managers seem to agree, as STLA stock is the only one out of the group with a Positive Hedge Fund Signal.
