GM Gains in Its Largest Market: China

GM continues to make steady gains in China, now its largest market.

Jun 10, 2014 at 11:07AM


Cadillac is turning into a good growth story for GM in China. Sales of the XTS, shown here in a GM marketing image from China, were up big in May. Source: General Motors Co.

General Motors (NYSE:GM) may no longer be the biggest automaker in China, but it's still putting up solid growth numbers.

GM was outsold in the world's largest auto market last year by global archrival Volkswagen (NASDAQOTH:VLKAY), while domestic archrival Ford (NYSE:F) has been on a massive growth tear in recent months.

But GM is still getting plenty of sales in the Middle Kingdom. As Motley Fool senior auto specialist John Rosevear notes in this video, GM's getting a lot of its growth with some brands -- and cars -- that should look awfully familiar to Americans.

A transcript of the video is below.

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John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for General Motors made some big big headlines last week with its big report on the investigation into the ignition switch recall scandal, that kind of dominated the automotive headlines for a few days, but there was some other GM news to report and it's worth our attention.

China is of course now the world's largest automotive market, and it's GM's biggest market in terms of total sales, though not yet in terms of profits. It still makes more money here in North America but there's no question that China has become hugely important to GM in recent years, and so we watch GM's sales numbers carefully.

And last week we heard that GM's sales numbers in China were pretty decent in May. Sales were up 9.2 percent over the year ago month, with the Buick, Chevrolet, Cadillac, and Wuling brands all reaching new highs for May sales, GM said.

Now, GM has three major joint ventures in China, the highest profile one is called Shanghai GM, Shanghai GM is a partnership with Chinese automaker SAIC and they build and sell vehicles mostly under the Buick, Chevrolet, and Cadillac brands. Shanghai GM had quite a good month, sales were up 15.8 percent, with a lot of that growth coming from Cadillac.

Cadillac has been just a tiny player in China's booming luxury market, which is heavily dominated by the three big German luxury brands, in fact Audi alone has around a third of the market, followed by BMW (NASDAQOTH:BAMXF) and Mercedes-Benz, the three of them together have roughly three quarters of the market.

Cadillac was really late to this party, GM was slow to make an effort to get into the luxury end of the market in China, and Cadillac officials are hoping to get to 10 percent market share by the end of the decade.

But they're seeing some good growth now. Cadilalc sales were up 59.2% in May, driven by a big jump for the big XTS sedan, which sold a little over 2500 units. That doesn't sound like a whole lot, but hat's more than they sold in the U.S. last month, Cadillac sold 1,959 XTSs here in May.

They're also doing pretty well with the SRX, that's Cadillac's midsize crossover SUV, luxury crossovers are a huge booming market segment in China, they're big here in the U.S. but they seem to be even bigger in China, SRX sales were up 10.4%, which is not bad growth for a model that is getting to the end of its life cycle.

But Cadillac's sales can't touch Buick's in China, Buick sales were up 15.2% to a little over 72,000 vehicles, as usual the Buick Excelle XT and GT posted big sales numbers, those are cousins of the U.S. market Buick Verano, a compact sedan and hatchback. Chevy did well too, up a little over 13%, its best seller in China is the compact Cruze sedan, up 13.4%.

Long story short, GM's effort in China seems to be keeping pace with the market and with rivals, and the Cadillac expansion plan seems to be generating some good results. Thanks for watching.

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends BMW, Ford, and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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