GM’s huge post-bailout investments in China bear fruit.
China is still rocking, GM announced today, unlike the US where GM’s vehicles sales fell 1.3% in 2016, with cars down 4.3% and trucks, including SUVs, flat. It joined Ford, Fiat-Chrysler, Toyota, BMW, and other automakers in the US that had booked their first annual vehicle sales declines since 2009.
But that’s not what is happening in China. China became the largest new vehicle market in the world for the first time in 2009 with growth rates that made global automakers and their financiers salivate. But these phenomenal growth rates ran aground in early and mid-2015, and sales began to fall on a year-over-year basis. The government ignored the debacle for a while, then stepped in with incentives, and the race began anew.
So today GM announced that its deliveries of new passenger vehicles – cars, light trucks, SUVs, and MPVs (multi-purpose vehicle) – in China grew 7.1% in 2016 to 3.87 million vehicles.
This compares to its US sales, which fell 1.3% to 3.04 million vehicles. So GM sold 27% more vehicles in China than in the US. The gap is likely to grow further.
GM sells vehicles in China under these brands: Baojun, Buick, Cadillac, Chevrolet, Jiefang, and Wuling. Every sale that GM books in China is through its joint ventures, a requirement in China where technology transfer is part of the package of doing business in China. So GM’s sales in China might not quite carry the same weight as its sales in the US. But still.
It was the fifth year in a row when GM’s vehicle sales in China exceeded its sales in the US. All sales numbers cited here are vehicle sales, as measured by dealer deliveries to their customers, not dollar sales, which automakers report separately on their quarterly financial statements on a later date.
And GM is proud of its China strategy. But this is the “New GM” that emerged from Chapter 11 bankruptcy reorganization. The old General Motors Corporation, after it had sold its major assets, trademarks, and intellectual property to the “New GM” on July 10, 2009, was renamed “Motors Liquidation Company” and began disappearing. The “New GM” bought those assets with Debtor in Possession (DIP) funding from the generous US taxpayer. And then, even as the old GM was liquidating plants in the US, the “New GM” went on an investment spree in China.
These are big investments in plants, equipment, technologies, design centers, logistics facilities, and what not. And GM continues with that success recipe of investing in China. Today it announced proudly:
Last year, GM launched 13 new and refreshed models in China, putting it on track to fulfill its plan to introduce 60 models through 2020. It is focused on the luxury, SUV, and MPV segments. About 40% of GM’s product launches in China through 2020 will be SUVs and MPVs.
But customers in the US can also benefit from GM’s great transformation to General Chinese Motors, now that its China-made SUV, the Buick Envision, has arrived in US showrooms with an MSRP of over $40,000.
The hype about auto sales in December in the US has been deafening, and automaker shares jumped yesterday, though they weren’t so lucky today, even as US “car recession” spreads among the biggest automakers. Read… Annual US Auto Sales Fell for First Time since 2009 at GM, Ford, Fiat-Chrysler, Toyota, VW, BMW…