General Motor Sales in China Unaffected Despite Industry Slowdown
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General Motors_China

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General Motors, foreign automaker giant in China, declared Monday that in 2011, its sales in China hit a record high, regardless of a broader slowdown in the world's largest automobile market. General Motors Co. and its joint ventures in China set record sales by selling around 2.55 million units in 2011, up by 8.0 percent from the previous record of 2.35 million in 2010.

Kevin Wale, President and Managing Director of the GM China Group declared in a written statement to a business magazine, “GM stayed ahead of the competition in spite of the slowdown in the growth of industry demand thanks to GM’s broad portfolio of appealing vehicles.”

Inflation, higher interest rates, tighter bank lending, lifting of consumer subsidies and buying restrictions in congested cities all contributed to the more modest environment.

GM’s Strategy

As stated in a manufacturing magazine, GM sales outpaced the industry’s growth in the world’s largest automobile market only after the addition of luxury Cadillac model. GM also introduced the local Baojun brand for to entry-level customers and offered discounts on light trucks. The overall vehicle sales in China slowed last year from 2010’s record 32 percent increase as inflation, higher interest rates and the end of a two-year stimulus plan deterred purchases.

John Zeng, Shanghai-based director of Asian forecasting at industry researcher LMC Automotive said, “The Detroit-based GM is the largest foreign automaker in China targeting luxury and affordable segments with its high-end Cadillac and Buick LaCrosse and entry-level with the Baojun 630, a sedan developed for the China market priced at about $10,000. In higher-end models they introduced a curvy European style which Chinese consumers liked, and in the low-end market they launched completely locally designed models.”

Business dailies and industry news reported that, “The China Association of Automobile Manufacturers, which tracks auto sales and production in the country, has yet to release figures for all of 2011. But association officials have predicted that annual growth for the whole of 2011 will be just five percent, down from an earlier forecast of 10-15 percent.”

GM’s Industry Outlook

Industry sales in China slowed last year after subsidies for rural buyers was removed by the government and it phased out a cut in the sales tax in January 2011. Beijing also enforced quotas on new vehicle licenses to help reduce congestion on the Chinese capital’s roads.

So, GM cut the price of its Wuling Sunshine light trucks in response to slowing demand. GM’s Wuling Sunshine sells at about $4,400. The automaker giant, GM, also rolled out its local automobile brand Baojun to target entry-level buyers in inland provinces and less developed cities.

GM aims to double its deliveries in China to 5 million by 2015 and also plans to focus on expanding its luxury car brand Cadillac and its sport-utility automobile lineup. The luxury automobile market in China has a strongly future, expecting to get GM a big focus for increasing its automobile sales.

 

Author
Aubrey Chang, Associate Editor Industry Leaders Magazine (www.industryleadersmagazine.com)

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