GM sales in China surge 67 percent in 2009

By Peter Whoriskey
Washington Post Staff Writer
Tuesday, January 5, 2010

General Motors sales in China surged 67 percent last year, the company announced Monday, as the automaker and its joint ventures exploited rising affluence there to sell more than 1.8 million cars and trucks.

GM, already among the most important auto manufacturers in China, said the market share of its Chinese ventures rose to 13.4 percent, up 1.3 percentage points from 2008. Leading the company's sales in China were Buicks, as well as inexpensive small vans and pickups.

The rapid growth of auto sales in China have made it a rich prize for manufacturers, and GM's recent success puts it in good position to benefit from any continued rise. Already, the number of cars sold in China rivals the number sold in the United States, and the Chinese market is expected to continue to grow rapidly.

"There's no question that China will become the world's largest auto market as long as the economy keeps growing," said Kelly Sims Gallagher, a professor at Tufts University and the author of a book about the Chinese auto industry.

While there are about 850 cars per 1,000 people in the United States, she said, citing federal figures, there are about 35 cars per 1,000 people in China.

"There is a lot of room for growth," Gallagher said.

The potential for soaring sales has set off a race into China. Currently, the leaders in market share include Volkswagen, Changan, Shanghai Automotive Industry Corp. and Hyundai, according to figures from IHS Global Insight.

GM's strength in the Chinese market last year partially offsets the collapse of its sales in the United States. Sales across the U.S. industry have dropped from about 16 million annually during the boom to about 10.5 million in 2009.

The cars that GM sells in China sell for considerably less than those sold in the United States, however, so revenues from the U.S. market remain higher.

Because the U.S. government invested $50 billion to rescue GM from bankruptcy last year, the company has had to deal with complaints that its focus is too international, and that it should try to grow the size of its U.S. business and factories.

But Rebecca Lindland, an analyst with IHS Global Insight, said GM's success would help it repay the loans and other investments the government has poured into the company.

"Regardless of where they make the money or make the vehicles, the profits come back to the U.S.," Lindland said.

She attributed the company's China success to, among other things, its concentration on adapting its designs to the market.

"China has been a focus for GM for a number of years," she said.

General Motors' joint venture with Shanghai Automotive Industry Corp. and Liuzhou Wuling Automobile accounted for most of its China sales, according to the company figures.

The joint venture sells pickups and small vans, known in China as "bread loaf cars" due to their shape. Many sell for roughly between $4,000 and $7,000.

SAIC-GM-Wuling became the first automaker in China to sell more than 1 million vehicles in a year, the company said. The Wuling Sunshine set a Chinese industry record for annual sales by a single model, with sales of 596,630 units. Officials with the Wuling joint venture attributed their sales records to the Chinese government stimulus policy, which encouraged rural residents to upgrade from farm vehicles to more efficient minivans and trucks.

"Chinese consumers responded enthusiastically to our lineup of modern, fuel-efficient and stylish products," Kevin Wale, president and managing director of the GM China Group, said in a statement.

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