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China sales a bright light for GM
July 1, 2009
Shanghai - General Motors China said Wednesday sales in the world's most populous nation have risen steeply so far in 2009, marking a stark contrast to the auto giant's woes elsewhere.
The iconic but struggling US automaker reported its joint ventures sold 814 442 vehicles in China in the first half of 2009, up 38 percent from the same period last year.
"China's vehicle market continued to outpace most expectations for growth," GM China Group President Kevin Wale said in a statement.
"The market benefited from stimulus policies adopted by the Chinese government as well as growing demand for personal transportation in tier-three and tier-four cities and rural areas."
GM China's fortunes are the reverse image of its US parent, which has filed for bankruptcy, underlining the Asian market's growing importance for the global auto industry.
China overtook the United States to become the world's largest car market for the first time in January.
GM's troubles have been further highlighted here in recent weeks after Sichuan Tengzhong Heavy Industrial Machinery Co, a little-known Chinese machinery maker, placed a bid to buy its iconic Hummer brand.
Sales from GM's commercial-vehicle joint venture in China with Shanghai Automotive Industry Corp. Group jumped 49.9 percent to 524 598 units.
"Minivans are at the low end of the auto market, which means their profit margins are thinnest," said John Zeng, a Shanghai-based analyst with consultancy IHS Global Insight.
"The jump in sales of these vehicles does not necessarily mean the profitability of the industry is improving."
Sales from the passenger vehicle joint venture, with Shanghai General Motors, reached 288 843.
The balance was accounted for by vehicles imported into the country, according to GM China.
The company said it was optimistic about the outlook for the rest of the year.
"Vehicle sales in China are expected to remain strong in the second half of 2009," Wale said.
Recent Chinese incentives to stimulate domestic consumption include slashing purchase taxes on cars with engines smaller than 1.6 litres and subsidising alternative energy vehicles.
The China Passenger Car Association has forecast auto sales in the nation could hit a record 11 million units this year, as sales in the rest of 2009 are expected to improve on the first five months, the China Daily reported.
In 2008, vehicles sales in China rose about 6.7 percent to 9.4 million units - a modest growth rate by Chinese standards as demand was hit by the global downturn.
Given the market fundamentals in China and the United States, the current Chinese domination of sales figure is unlikely to last, analysts said.
"China's weight on the global auto market is increasing, but it is unlikely to replace the United States," said Zeng.
"It may surpass the US this year as the US market is still in a V-shaped rebound. The US passenger vehicle market is around 16 to 17 million units, and the Chinese market is unlikely to reach that level yet." - AFP
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