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General Motors China

Posted: May 18th, 2011 | Author: | Filed under: Auto News, China | Tags: , , , , , , , | Comments Off on General Motors China

Is General Motors Chinese business likely to produce more sales than it’s U.S based parent?

GM China registered sales of around 685,000 in Q1 with a growth rate of 10% from same period last year. This growth will likely accelerate GM’s share in China despite the expiration of government incentives and subsidies. The automaker is consolidating its position in China and plans to double its sales in the next five years with its multi-brand strategy and focus on electric vehicles, though increased competition from other global automakers like Ford, Daimler AG, Honda, Toyota, Hyundai and Nissan could challenge these goals. General Motors has opened a second plant in Shanghai last year and added three new Chevrolet models in 2005, the Sail compact car, Epica intermediate sedan and Aveo hatchback. That pushed China sales for the brand past the 100,000 mark for the first time, establishing China as Chevrolet’s fourth-largest global market.

China’s vehicle market has nearly tripled in size from 4.56 million units – in 2003 – to 13.64 million units in 2009. Global Insight has forecasted that the Asian markets represent the largest growth potential in the global auto industry. Within Asia, 54% of that growth is expected to come from China. With the promise of tremendous growth, many international firms as well as Chinese firms are encouraged to allocate resources to seize the opportunities presented by the Chinese market. China sales of the Buick products in March rose 15.8 percent on an annual basis to 55,025 units. I Excelle was the leader in March, whose sales jumped 32.2 percent to 30,708 units. With demand for the Sail more than doubling to 12,920 units and demand for the Cruze reaching 17,348 units, domestic sales of the Chevrolet brand were up 6.7 percent year-on-year to 49,234 units. Cadillac luxury vehicle sales in March increased 43.7 percent from the same period of last year to 2,030 units, as sales of the SRX luxury utility vehicle totaled 1,222 units. Minivans and small trucks sold under the Wuling brand – made at the GM’s joint venture in southwestern China, SAIC-GM-Wuling Automobile Co –  benefited from strong sales in rural China and cities in the relatively poorer interior, it said. That joint venture sold 337,188 units, up 43.4 percent from 2004.

“As our largest market, China played a significant role in GM’s success in 2010. We will continue investing aggressively in China to ensure the long-term success of our company.” General Motors Co. Chairman and CEO Dan Akerson made these remarks during a media briefing today in Beijing. He also commented on the growth of the company’s business and the importance of China to the automaker.

According to Akerson, “GM’s success in China is the result of our strategic approach to doing business in this country. The foundation is great product, a consistent focus on understanding and meeting the needs of local consumers, fantastic partnerships, and a dedication to bringing the latest industry technology to China.”

In 2010 we have seen even more intense competition among the foreign and domestic brand vehicle manufacturers as they attempt to capture growth opportunities in China. As this is happening, the local manufacturers will strive to upgrade their brands and product portfolios to meet the more upscale image aspirations of Chinese consumers.

GM’s Multi-brand Strategy, Focus on Electric Vehicles. Over the next five years, GM plans to introduce more than 60 new and upgraded models, nearly half of which will be in its two mainstream brands in China: Chevrolet and Buick. In Q1, GM saw an increase in units sales across all of its brands: Buick, Cruze, Cadillac, Excelle, and Chevrolet. [2] GM is also in works with its joint-venture partner SAIC to develop next generation electric vehicle architecture. The company has plans to establish a lab in Shanghai to explore and develop battery technologies, and China will be one of the first markets where GM will offer its Chevrolet Volt extended-range electric vehicle.

“GM will continue to make China one of our priorities,” said Akerson. “We plan to introduce more than 20 new and upgraded models over the next two years, strengthen our local product development capability, expand our cooperation and sharing of technology with local partners, and lead in the introduction of new energy vehicles including the Chevrolet Volt extended-range electric vehicle. All of this is part of GM’s long-term commitment to the sustainable development of China’s automotive industry.”

GM China Group President and Managing Director Kevin Wale outlined GM’s five-year plan in the automaker’s largest market. According to Wale, “Over the last 5 years, GM has focused on growing all areas of it’s business in China – from our brands to our product lineup to new business opportunities – both on our own and with our partners. We have recorded many achievements, but we still have a lot more to achieve.”

Shanghai-GM sold 99,589 vehicles in China in March, an increase of 14.5 percent year-on-year and a record for the month. SAIC-GM-Wuling, GM’s tripartite microvan joint venture with partners SAIC and Liuzhou Wuling Motors, registered domestic sales of 125,247 vehicles in March. FAW-GM, GM’s light-duty truck joint venture, generated domestic sales of 8,161 vehicles for the month

“GM had a good month and a solid start to the year despite the expiration of government incentives at the beginning of 2011 and the consequences of the tragic earthquake and tsunami in Japan,” said Kevin Wale, president and managing director of GM China Group. “Due to hard work and a comprehensive global supply chain, GM and our joint ventures in China were able to overcome the challenges.”

GM has successfully adopted a multi-brand strategy to meet the differing and constantly changing needs of the Asian market. GM seems to be building a broad portfolio of brands to ensure it brings the right products to market. Over the next five years, GM will be introducing more than 60 new models and major product upgrades. Its two mainstream brands, Buick and Chevrolet, will account for nearly half. Buick will introduce about 12 new and upgraded products to expand its image as the leading premium vehicle brand in China. In addition to rolling out a variety of new body styles and lifestyle vehicles, Buick will also offer its customers the latest technologies.

From Chevrolet will come 15 new models and upgrades, which will range from affordable small cars to midsize sedans. Chevrolet will also bring to the market a new lineup of SUVs and performance vehicles. Wale emphasized that GM will continue to leverage its unmatched local vehicle development capability, including its Pan Asia Technical Automotive Center (PATAC) joint venture in Shanghai.

“Successful new models like the Chevrolet New Sail and new Buick GL8, and the upcoming Baojun 630, have all been developed in China,” he said.  “Our growing product development capability will enable us to continue moving quickly to meet the unique needs of the market and our customers nationwide.”

Electrification has become the overriding trend of the global automotive industry for reducing its century-long dependence on petroleum, according to Wale. GM offers the most comprehensive range of new energy products of any automaker in China. It has already introduced locally the Buick LaCrosse Eco-Hybrid and Cadillac Escalade two-mode hybrid. Later this year, China will be among the first global markets to offer the Chevrolet Volt extended-range electric vehicle. Last month, the Volt became the first electric car to travel a long distance – from Shanghai to Hangzhou – nonstop. Wale announced that this week the Volt and Electric Networked-Vehicle (EN-V) showcased at World Expo 2010 Shanghai will participate in a ride and drive program organized by the Shanghai Municipal Government’s New Energy Promotion Office.  The program will be held in Jiading, an international EV pilot site.

In December 2010, Shanghai GM introduced the Sail battery-electric concept vehicle, which was developed by Shanghai GM and PATAC. A drivable version will be introduced following Auto Shanghai 2011.

Wale said that GM will be introducing the new Buick LaCrosse with eAssist, which offers a fuel economy improvement of 25 percent, and sharing its plug-in hybrid technology, which is being demonstrated in the Buick Envision SUV concept vehicle that is making its debut at Auto Shanghai 2011. GM also plans to cooperate with its strategic partner SAIC to co-develop a next-generation electric vehicle architecture relevant for China and is establishing a battery lab at the new GM Advanced Technical Center in Shanghai to explore battery technologies. It will work with the domestic supply base as well to develop a strong local capability for the provision of high-quality components essential to support the industry’s move to electrification.

“We have no intention of letting up on the accelerator,” Wale said.

GM gave no figures for profits in its China operations. But in July-September quarter, GM earned $176 million in Asia while losing US$1.6 billion in North America. In 2004, GM sold 4.7 million cars and trucks in the U.S. and 4.3 million elsewhere. GM’s sales figures also suggest an overall market recovery in China, where sales have started to pick up after slumping in the second quarter. But with strong sales growth coming from small, cheaper cars, profits at major automakers are expected to shrink. Heightened competition is also forcing prices down, and GM this week announced a nearly 11 percent price cut on its Buick Regal and Espica models.

On April 17, GM signed an MOU with the Sino-Singapore Tianjin Eco-City Investment and Development Co Ltd. GM will introduce a next generation of the EN-V, which was a centerpiece of its display at Expo 2010, for testing in a real-world environment. As part of the agreement, GM will initiate a feasibility study to incorporate the mobility Internet into the transportation infrastructure for vehicles of tomorrow to operate. Wale divulged that GM has reached a preliminary agreement with the Beijing Traffic Research Center to conduct joint research to address urban congestion challenges as part of its effort to directly address the concerns being expressed in major cities.

According to Wale, GM has all the fundamentals in place to continue to lead the industry. To further capitalize on the unmatched opportunities that the Chinese market offers, GM plans to double its sales volume from about 2.35 million units in 2010 to around 5 million units by 2015. The automaker will put a premium on growing sales in a sustainable manner that is integrated with the growth of China’s capability.

“We have set some aggressive goals with our five-year plan,” said Wale. “We are confident that we will achieve every one of our goals by providing local consumers great products and compelling designs relevant to the China market and by following our strategy of working in China, with China, and for China.”

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