Please ensure Javascript is enabled for purposes of website accessibility

General Motors' March Sales Surge in China but Can't Offset a Slow Start

By Daniel Miller - Apr 12, 2017 at 9:07AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite March's sales jumping double digits during March, investors hope a surge in more profitable SUVs and MPVs can offset a slight first-quarter sales decline.

One of General Motors' (GM -0.55%) smartest moves was getting into China's automotive market before most of its global competitors. Fiat Chrysler Automobiles has struggled to get things going in the region, and GM outsells its crosstown rival, Ford Motor Company, by roughly three times in China. However, this year had more question marks than in years past, and it also had a slower start thanks to a diminished tax incentive. The good news: GM's March sales data shows a nice uptick in demand. Here are the highlights.

By the numbers

General Motors delivered a March record of 345,448 vehicles, which was a strong 16% gain over the prior year. Not only was it a March record, it was GM's largest year-over-year sales gain since last August. The driving force behind those gains was predictable: SUVs and MPVs, which soared 45% and 23%, respectively.

This could be a trend with staying power, too, because GM has focused not only on launching more SUVs and MPVs, but on expanding its value-oriented Baojun brand, which has been a runaway sales success.

"SUVs, MPVs and luxury vehicles will help us further tap into the market's growth potential," said GM Executive Vice President and GM China President Matt Tsien, in a press release. "We will continue to expand and upgrade our offerings across segments. Many of our new models will be on display at this month's Auto Shanghai 2017."

Brand highlights

The Baojun brand was GM's biggest winner in March, with sales skyrocketing 81% compared to the prior year, to 81,353 units. Part of that huge gain was due to the Baojun 510 small SUV, which recorded an impressive 16,443 units sold during its first full month on the market. Another huge winner was Baojun's 730 MPV, which sold more than 30,000 units in March, a 38% gain compared to the prior year.

GM presenting a new SUV product launching in China.

Image source: General Motors.

Buick has also sold incredibly well in China and recorded a 21% gain in sales compared to the prior year, up to 88,519 units sold. For context, GM sold more than four times the number of Buicks in China than it did in the U.S. last month (20,957 units). In fact, the Envision recorded 16,000 units sold during March, which almost matched all of Buick's March U.S. sales.

Cadillac's March sales also performed well in terms of year-over-year gains, even if volume wasn't eye-popping compared to that of GM's mainstream brands. Cadillac recorded a 63% increase in sales and topped 12,300 units sold during March. The XT5 SUV continues to be the brand's sales champion and generated more than a third of Cadillac's total sales.

China is going to continue to be a critical story for GM, and other major automakers, as management looks for ways to offset a plateauing U.S. market. GM International Operations, which includes and is largely driven by China, was GM's second-most profitable entity during the fourth quarter, behind only North America. Despite a 16% surge during March, GM's sales during the first quarter declined 5.5% thanks to a slower-than-anticipated start to 2017.

We'll find out if a surge in SUV and MPV deliveries, which are more profitable, can offset a slight decline in total sales volume during the first quarter when GM delivers its earnings presentation on April 28 -- because improving China's profitability will be a critical factor in GM's growth story.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
GM
$34.63 (-0.55%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.