http://www.thestar.com/NASApp/cs/Con...d=968332188492

Jul. 4, 2006. 11:54 AM
ELAINE KURTENBACH
ASSOCIATED PRESS


SHANGHAI — Despite its woes in the U.S. auto market, General Motors Corp. reports business in China is booming.
The world’s largest automaker said Tuesday its sales in China during the first half of this year jumped 47 per cent over a year earlier, helped by stronger than expected demand.

GM and its joint ventures sold 453,832 vehicles in China in the January-June period, compared with 308,722 in the same period of 2005, the company stated.

GM claims a 12.5 per cent share of China’s quickly growing auto market, up from 10.8 per cent a year earlier, making it the No. 1 foreign automaker in the country.

Last year, its sales in China surpassed those of longtime leader Volkswagen AG of Germany, which also reported strong sales growth in the first half.

Beset by declining profits and growing competition back home, General Motors has sought to cash in on a rebound in auto sales in China by rolling out new and upgraded models under several brand names.

Sales of the Buick Excelle sedan climbed 38.7 per cent year-on-year in the first half to 145,786 units, while sales of the Sail and other Chevrolet models surged 81.4 per cent to 75,710.

“We capitalized by rolling out a series of new and upgraded products under several brands to complement our existing lineup of vehicles,” said Kevin Wale, president of GM China Group.

China reported that overall auto sales rose 30.8 per cent in the January-May period to 2.97 million units, while output rose 32 per cent to three million units.

That followed a 21 per cent increase in passenger car sales during 2005.

GM’s flagship joint venture with Shanghai Automotive Industry Corp. Group saw sales rise 49 per cent in the first half to 201,901, while sales of its minivan and commercial joint venture, SAIC-GM-Wuling, climbed 45 per cent to 250,066, GM said.

Meanwhile, Volkswagen reported Tuesday that its sales in China jumped 30 per cent in the first half amid launches of several new models.

Volkswagen said it sold 345,375 units in China in the six-month period, including imports and Audi-branded vehicles.

VW was the first major foreign automaker to enter the China market in 1984 through a joint venture. Its sales fell about 15 per cent last year to 564,306, while GM sales climbed 35 per cent to 665,390.

GM’s success in China has been largely overshadowed by its woes back home. The company has embarked on a massive restructuring plan designed to improve its poorly performing North American division, which is suffering from declining profits, high labour costs and growing competition from Asian automakers.

GM announced plans last year to close 12 plants by 2008 and recently said 35,000 hourly workers had agreed to retire early or accept a buyout offer.

In June, the automaker’s U.S. sales plunged 25.7 per cent from the same month a year ago.

 

In the global economy you can't remain a superpower simply by keeping a strong footing at home. A strong footing at home is important to strengthen your 'reach' to the rest of the world, but simply being content with strong US sales and ignoring global sales is a serious mistake.

I'm not saying GM has done that - not at all, actually. But I am saying I see a little too much focus from some people here on their US sales, when IMO I'm much more excited to hear this news from China than I am depressed to hear of a couple points lost share in the US.

 

6 months of China sales is about the same as a month in US sales this year. Maybe that explains why we get so bent on US sales trends more than foriegn growth (which does excite me)

 

But sales outside the US is our future. Shrinking sales in the US is an inevitable thing. GM will never in the foreseeable future be back to its original dominating marketshares in the US. There are just too many brands competing with them these days, and only more brands to come. GM's main focus IMO should be increasing foreign sales, and restructuring their US infrastructure to become profitable at, say, 20%, rather than 35%. Today's economy is more about scope within a nation than it is about scale. Finding a way to focus the scope of your product on each nation and its individual culture, rather than trying to use mass scales to drive costs down and then try to sell undersirable cars in a nation strictly based on slightly better pricing. Get the scope right, and then use technology to find ways to do things like almost invisibly share platforms, and thus cut your costs without necessarily making clones all around the world.

 

I agree with Threxx on this one. If that DAMN European market wasn't so tough though...

Them bastards are so "domestic" brand loyal it's not even funny. Could be why VW, Audi, etc... are having quality problems. Could it be they are too comfortable with their "Domestic Sales" as GM has been in the past?

 

I wouldn't doubt it at all. Don't forget Mercedes. BMW seems to be doing OK. Of course Ford and GM have been trying to crack their market with Jag, Saab, and Opel for some time now.

 

GM does very well in Europe, sales-wise. Whether they make money is a different question. This is from 2004:

 

Probably one of the best moves GM has made in the past decade was to keep expanding in China. I think I remember reading an article a few years back where GM was contemplating on scaling back their efforts in China, but wisely decided against it.