GM: Accelerating Despite Speed Bumps

It seems General Motors (GM) has been able to successfully come out of a difficult patch of declining sales that continued through most part of the year 2015 in China. The last two reported months i.e. October and November have given GM China reason to smile as the combined retail deliveries rose 15 % and 14 % year on year respectively. In the nine months through September 2015, General Motors and its joint ventures sold a total of 2,492,428 vehicles in China at an average of 276,936 vehicles per month.
But in October the sales figure was up at 327,037 and in November it was 346,671. During the first 11 months of 2015, retail sales by GM and its joint ventures in China increased 4.1 % on an annual basis to a record 3,166,791 units. In November, the Buick, Cadillac and Baojun brands set all-time monthly sales records.

SUVs have kept it up for GM throughout the lows and highs that its overall sales have seen this year. Within this fast-growing segment, GM’s SUV sales jumped 170.8 % in September, 255 % in October and 231 % in November led by the Buick Envision and Baojun 560.

Buick sold 107,925 units in November, registering a 45 % rise over the year ago performance. The sales of the Excelle GT nameplate increased more than 100 % from last month on the back of the all-new Excelle GT launched earlier this year. Sales of the Verano nameplate increased by 60 % over last month, crossing the 9,000 unit mark capitalising on the strong presence of the recently launched Verano sport sedan reinforced by the Verano Hatchback and Verano GS launched in November.

The luxury brand Cadillac sold 7,935 units in November, up 57 % and registered a seventh consecutive double digit monthly growth. The growth was led by the ATS-L which jumped 182 % in November. The newly launched ATS-L-28T Fashion Edition with an eight-speed transmission hit the market on 26th November and is yet to report its first month of sales.

The third bestseller, Baojun sold 58,051 units in November, up 110 % from the same month last year. The company is planning to launch new models under this brand in 2016. These new models will have features like 1.5L turbocharged engines and automated transmissions to improve engine efficiency and user experience.

Outlook:

The China Association of Automobile Manufacturers (CAAM) announced that the total November vehicle sales in China were 20 % up year on year to 2.51 million. For the full year 2015, the leading industrial body expects the full year sales to be 3 % above the last year.

Up to September this year, the car market in China seemed to be running out of gas. It seemed that it was no more going to move forward and even the bestsellers like GM, VW and Ford will have to look for a replacement of the boiling hot market that China was up to very recently. But sales figures of last two months suggest that we can look forward to the world’s biggest car market with a lot of hope.

For the next year i.e. 2016, CAAM has estimated a growth of 5 to 7 % in vehicle sales in China while PWC estimates 25 million units in 2016 or 8 % growth.  The hot segments for the coming year would surely be the SUV, MPV and luxury segments which could represent up to 80 % of overall growth in the market over the next several years. GM has grown the share of these segments in its portfolio over the last few years due to which is very well positioned to participate in this growth.

GM together with its joint ventures has a vast presence in China and it will get benefited by the government incentives in a proportion similar to its market share. The company has been improving its product mix with recently launched models. The local government has slashed the purchase tax on vehicles with engines smaller than 1.6 litres from 10 % to 5 %. As a result 30 car lines sold by GM’s joint ventures in China are eligible for a 50 % vehicle purchase tax cut that runs from 1st October through the end of next year giving the customers more reasons to buy a GM made car. Therefore, GM’s prospects in China for year 2016 are extremely bright.
Published on Feb 11, 2016
By Vinay Singh

Copyrighted 2016. Content published with author's permission.

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