Bloomberg News

GM Sales in China Accelerate as Demand Shrinks for Ford, Honda

December 06, 2011

Dec. 6 (Bloomberg) -- General Motors Co. reported China sales in November rose at the fastest pace in 10 months, led by deliveries of Wuling light trucks and Buick Excelle sedans.

Deliveries to Chinese dealers last month climbed 20 percent from a year ago to 237,130 vehicles, the Detroit-based company said in a statement today. That’s the fastest increase China’s largest foreign carmaker has reported since January.

Sales of mini commercial vehicles and sedans at SAIC-GM- Wuling Automobile Co. jumped 40 percent after GM, poised to overtake Toyota Motor Corp. in global annual sales, cut prices of Wuling light trucks. The gains were a contrast to Ford Motor Co. and Honda Motor Co., which posted drops in deliveries last month as overall demand in the country slows.

“GM gained a lot of market share from their minivan competitors this year through discounts and a strong reputation,” said Marvin Zhu, a Shanghai-based analyst at researcher LMC Automotive. Wuling’s quality and service is perceived to be better than other local brands, Zhu said.

For the first 11 months of 2011, GM’s deliveries increased 8.2 percent to 2.35 million in the world’s largest automobile market. Still, that’s slowing from 2010, when sales climbed 29 percent, after the government phased out sales-tax breaks and rebates for rural buyers in January.

The carmaker aims to expand its luxury car and sport- utility vehicle lineup to double deliveries in the country to 5 million by 2015.

Chinese Slowdown

Not all carmakers saw demand rise, adding to indications that the world’s second-largest economy is cooling. China’s central bank last week cut lenders’ reserve requirements for the first time since 2008 to pump money into the financial system.

Ford’s China sales fell 7 percent in November to 43,338 units, led by a 19 percent decline in deliveries at its commercial-vehicle joint venture, according to an e-mailed statement today.

Honda, Japan’s third-largest automaker, said it sold 58,228 vehicles in China last month, 3.3 percent fewer than a year earlier. The Tokyo-based company said deliveries decreased by 8.4 percent to 539,442 units in the first 11 months.

Auto sales in China surged 32 percent to 18.06 million vehicles in 2010, according to the China Association of Automobile Manufacturers. Growth slowed to 3.2 percent during the first 10 months of this year, according to the association, which will report November industry figures later this month.

Chinese auto demand may expand 5 percent to 10 percent in 2012, led by demand for passenger cars, Kevin Wale, president of GM’s China unit, said in an interview on Nov. 17. Sales of commercial vehicles will probably grow 5 percent, he said.

Slowing Growth

GM is banking on China to offset a shrinking market in Europe, where researcher IHS Automotive estimates car demand will fall 1 percent in 2012, the fifth straight annual decline.

Sales by SAIC-GM-Wuling, GM’s minivan venture with SAIC Motor Corp., rose to 119,133 vehicles, a record for November, according to the statement. The partnership makes China’s best- selling vehicle in 2010, the Wuling Sunshine minivan.

Shanghai GM, the U.S. carmaker’s sedan venture with SAIC that produces Buick and Chevrolet-branded cars, boosted sales 7.6 percent to 113,120 vehicles. Sales of Buick Excelle passenger cars climbed 25 percent to 23,885 units.

Sales growth at Shanghai GM may slow to 12 percent next year as the automaker faces capacity constraints and few model rollouts, LMC’s Zhu said. The passenger carmaker is expected to deliver 19 percent more cars this year, he forecast.

GM’s Buick, Chevrolet and Wuling are among the most successful international brands in China, and their dealerships are well-positioned in less-developed cities with high growth prospects, Alexander Potter, senior research analyst with Piper Jaffray Cos., said in a report on Dec. 5.

“When the European debt crisis passes, GM will be well- situated to ride China’s growth for at least the next five years,” Potter wrote.

--Liza Lin. Editors: Chua Kong Ho, Young-Sam Cho

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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