What: General Motors (NYSE:GM) said on Monday that its sales in China fell 3.9% last month, as sales of key sedan models slumped amid China's softening economy.
For the year through September, GM's sales in China are up 1.6%, ahead of the overall market -- thanks in large part to some new SUV models. Those SUVs continued to do well in September.
So what: GM is second only to Volkswagen in the world's largest new-vehicle market. But GM was slow to respond when Chinese customers' tastes started shifting more toward SUVs a few years ago. Just as they have in the U.S., "crossover" SUVs have become very popular in China over the last few years. But -- ironically, given GM's strong SUV lineup here -- GM was caught off-guard by the shift.
It took some time for it to bring more SUVs to its Chinese dealers. But over the last year, its SUV sales have surged. SUVs accounted for 17.3% of GM's China sales last month, up from just 6.1% a year ago, the company said.
Two models in particular -- at opposite ends of the market -- have done especially well.
Chinese domestic automakers have made big gains with inexpensive SUVs, mostly at the expense of the global giants. But GM has fought back with an affordable-but-nice model produced under its Chinese Baojun brand, the Baojun 560. With a starting price around $12,000, the 560 offers a lot of vehicle for the money.
At the upper end of the market, GM has made big gains with an all-new crossover SUV, the Buick Envision. It's the first model on a new and improved GM vehicle architecture that will be rolled out in Europe and the United States over the next couple of years. (GM may be gearing up to show an American version of the Envision in Los Angeles next month, for release in 2016.)
The Envision is a plush five-passenger crossover that starts around $43,450, with well-equipped versions selling around $55,000. It has helped drive the Buick brand to a 4% gain this year through September -- and it gave GM's Asian unit a much-needed profit boost in the second quarter.
Now what: Like most of its rivals, GM's sales have been under pressure in China for several months. GM managed a good result in China last quarter, thanks in part to models like the Envision -- and thanks also to its savvy executives, who quickly recognized that the market was slowing and made production cuts to prevent a big inventory buildup.
A year-over-year sales decline is rarely good news. But in GM's case, it's not as bad as it could be. It likely gained on VW in September -- and it probably generated another decent result for its third-quarter earnings report. We'll find out in a few weeks.
John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. 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.