At this point, anyone looking for good news knows enough to steer clear of General Motors
So General Motors can hardly be blamed for trying to accentuate the positive to offset the gloom. And what better way to do that than pointing to success in what is perhaps the world's hottest market? A Reuters story today has the auto giant's top executive in China, Kevin Wale, stating that he believes GM's Chinese sales will increase beyond the 10% to 15% auto sales growth rate for the country, meaning GM anticipates capturing additional market share in the fast-growing Asian nation.
Good news, right? Not so fast. The China Securities Journal recently reported that the Chinese government is expecting an auto production capacity glut in the next five years. China's National Development and Reform Commission says that if investment in the auto sector doesn't fall off, total annual capacity could hit 20 million units in 2010. Demand in that year is expected to reach just nine million units, based on a 10% annual sales growth rate.
In short, China could very quickly be flooded with automobiles, making it difficult for GM, or, for that matter, Ford
Sorry, GM, but it doesn't look like China will be a magic bullet for your problems. Nor will cost-cutting stem the ongoing U.S. market share losses you have been experiencing for years. As I've said before, the only way for GM to bounce back is to design and produce vehicles that excite consumers. Admittedly, this is no simple task, but until GM comes out with a lineup that grabs the public's attention, its stock is likely to remain in the doldrums.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.