Key Takeaways Morgan Stanley downgraded the U.S. auto sector and several companies in it because of growing competition from China.General Motors and Ford had their ratings and price targets cut.Morgan Stanley noted that China now produces 9 million more cars than it buys.

Shares of Ford Motor and General Motors fell about 5% on Wednesday after Morgan Stanley analysts downgraded the U.S. automakers, citing a challenging market environment marked by falling prices and growing competitive threats particularly from China.

Morgan Stanley revised its outlook on the US auto industry, lowering its assessment from ‘Attractive’ to ‘In-Line’, and downgraded major US automakers including General Motors, Ford, and Rivian as part of the exercise.

Shares in General Motors Co. and Ford Motor Co. tumbled after Morgan Stanley analyst Adam Jonas warned that cars are too expensive for US consumers and a price war in China will hurt the bottom line there.