General Motors (NYSE:GM) said that its sales in China, the world's largest new-car market, fell 15% in 2019 amid tough market conditions -- and the automaker expects those conditions to continue in 2020.

GM and its joint-venture partners sold 3.09 million vehicles in China in 2019, a steep decline from the 4 million it sold in the country just two years earlier. 

GM's fourth-quarter sales in China were down 13.3% from Q4 of 2018.

The raw numbers

Retail sales were down year over year for all of GM's China brands in the fourth quarter, and for all except Cadillac for the full year. 

Brand Q4 2019 Change vs. Q4 2018 Full-Year 2019 Change vs. FY 2018
Baojun 180,196 (13.3%) 608,289 (27.6%)
Buick 226,954 (15%) 850,007 (16.7%)
Cadillac 51,461 (7.8%) 213,717 3.9%
Chevrolet 101,363 (29.1%) 418,000 (20.1%)
Wuling 276,200 (5.2%) 1,003,611 (5%)

Data source: General Motors.

What happened with GM in China in the fourth quarter?

As was true for much of 2019, the sluggish Chinese economy, intense competitive pressure in mass-market segments, and the ongoing trade-war talk between the Trump administration and the Chinese government all put pressure on GM's sales in the fourth quarter. 

A red Chevrolet Trailblazer, a small crossover SUV, shown with Chinese-language license plates.

The small Chevrolet Trailblazer is one of several all-new crossovers that GM launched in China in 2019. A version of the Trailblazer will arrive at U.S. dealers this spring. Image source: General Motors. 

GM's plan to offset those pressures has been fairly simple: Launch new products in China, focusing on crossovers and SUVs, in hopes of drawing more buyers to its dealer showrooms while boosting margins. The results so far have varied by brand:

  • Baojun, GM's low-cost China brand, is in the midst of moving its portfolio somewhat upscale in an effort to improve margins. It launched four new models, including two SUVs, in 2019, with more coming in 2020. 
  • The company introduced the three-row Buick Enclave crossover in China in November, and it said that initial demand has been good. GM now offers all three of its Buick crossovers (the Encore, Envision, and Enclave) in China. 
  • Cadillac, the one GM brand to pull off a full-year sales gain in China, is getting it done with both crossovers and sedans. The three-row XT6 crossover and CT5 sedan both joined its China lineup in 2019, and the smaller CT4 sedan will arrive later in 2020.
  • As in the U.S., GM continues to move the Chevrolet brand toward crossovers in China. The automaker launched two new affordable Chevy crossovers in China in 2019 -- the Tracker and Trailblazer -- and will bring the new Blazer to its China portfolio this year. 
  • The Wuling brand, long known for inexpensive commercial vans, has been working to add affordable passenger minivans to its lineup by adapting its commercial designs for young families. Given the intense pressures in lower-cost market segments in China, the brand had a good year.

What's ahead for GM in China in 2020?

GM will provide detailed full-year guidance with its fourth-quarter earnings on Feb. 5, but the message is already clear: Don't expect things in China to get better anytime soon. 

"We expect the market downturn to continue in 2020, and anticipate ongoing headwinds," GM China President Matt Tsien said. He said that GM China will stay focused on rolling out new products and keeping costs under control for the time being. 

As with any well-run automaker in a downturn, GM's goal here will be to win as many sales as it can with the best profit margins possible under the circumstances. 2019 was rough, but the company's strong long-term record in China inspires some confidence.

The main takeaway for auto investors: GM lost ground in China in 2019, but it's taking the right steps to hang on until conditions improve.

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