GM to add over 20 new, upgraded models in China
Published on February 18, 2011 by Tycho de Feijter
By Reuters. General Motors Co is expanding the range of cars it sells in China, a step that could help build on its position in the world’s biggest auto market as it tries reclaim the No.1 global carmaker spot from Toyota Motor Corp .
General Motors Chief executive Daniel Akerson said GM will add over 20 new and upgraded models in China in the next two years. He didn’t specify which car models the company would introduce.
“China is clearly a crown jewel in the GM universe,” said Akerson, speaking to reporters in Beijing on Tuesday. “China is a unique market sitting in what I think is the highest growth area in the world for the next 10, 20, 30 years.”China sales have been a major bright spot for GM and other global industry giants, including Bayerische Motoren Werke AG and Volkswagen . Last year, GM sold 2.35 million vehicles in the country, more than the Detroit heavyweight sold in its home market.
But the once-booming market is settling into a more rational growth pattern of 10-15 percent this year after the government scrapped most of its auto incentives at the end of 2010.
The Beijing city government’s recent move to impose quotas on new car registrations and possible similar moves by other big cities to tackle traffic gridlock will also apply the brakes on sales.
INTO THE THIRD TIER
Toyota, which overtook GM for the top global sales spot in 2008, barely retained it last year as a spate of U.S. recalls and slower growth in emerging markets weighed.
GM should have plenty of China growth ahead, however.
“China is GM’s most important growing market,” said Yale Zhang, an independent auto analyst in Shanghai. “In the foreseeable three to five years, it can be expected that this market will keep growing, as GM’s penetration in smaller cities is not as big as in Beijing or Guangzhou.”
Terry Johnsson, vice president for GM’s China operations said in November he would not be surprised to see 60 percent of its sales coming from tier 4 and tier 3 cities in the next five years, up from roughly a quarter now as the country’s wealth spreads inland.
But success in those smaller markets requires a different product strategy from what many foreign car makers have pursued, however, including a lineup of cheaper, lower-margin vehicles.
To some extent, GM has managed to do this, thanks to its partnership with China’s biggest auto maker SAIC.
The Chevy new Sail small car jointly developed by GM and SAIC become an instant hit upon it launch in January 2010, with annual sales topped 125,626 units, equivalent to 12 percent of China sales.
In November, GM and SAIC venture in south China unveiled its first proprietary car Baojun 630 to penetrate the small, inland cities which are becoming increasingly important for the U.S. automaker.
Akerson, who was a managing director at buyout firm The Carlyle Group before taking the help at GM, pledged to expand that China partnership.
“We will work with our partner SAIC to enhance our cooperation in the sharing of our technology in new and important areas, such as efficient powertrains and new-energy vehicles, and to expand jointly into new markets, starting with India,” the former naval officer told a room packed with a hundred reporters.
The company may need to further adjust its product mix, however.
“GM is pretty well positioned in China in terms of product portfolio and strong local partnerships, especially with SAIC,” said John Zeng, an analyst with J.D. Power Asia Pacific in Shanghai.
“But what GM may need to do is to produce sport-utility vehicles locally, as it’s the fastest-growing passenger car segment in China.”
Rivals such as Toyota, Volkswagen, Nissan Motor and Honda Motor have already rolled out SUVs, a small but fast-growing market segment in China.
China SUV sales doubled to 1.3 million vehicles in 2010, three time as fast as the overall passenger car market, official data showed.