GM expects Chinese car sales to remain strong

November 21, 2006 - 0:0
DETROIT, Michigan (AFP) -- Top General Motors Corp. executives said over the weekend that they anticipate another year of double-digit sales growth in China in 2007, as more consumers there snap up shiny new cars.

GM's chief financial officer for its GM China Group, Michael Bernhard, told reporters in Beijing on Saturday that the U.S. auto giant foresees its Chinese sales reaching 950,000 units in the coming year.

The Detroit auto-maker, which has faced stiff competition in its domestic market, produces vehicles in China through Shanghai GM and its SAIC-GM-Wuling partnership, as well as importing a small, but growing number of vehicles.

High-end demand from wealthy Chinese consumers has led GM to import its 120,000 dollar Cadillac XLR which is built in the U.S. state of Kentucky.

Bernhard and other GM executives, who toured some of GM's Chinese operations last week, said that prior forecasts, however, had underestimated the astounding pace of growth in China's expanding car market.

"All anyone knows at this point is that it will continue to grow and grow rapidly," Kevin Wale, president and managing director of Shanghai GM, said in Beijing.

The executives met up in Chinese capital, as well as visiting Shanghai, ahead of the China Auto 2006 autoshow.

Vehicles sales in the country's red hot auto market are expected to top eight million units in the coming year.

Wale said GM is pushing aggressively to adjust its vehicle mix and technical capabilities in China to meet the discerning demands of Chinese consumers.

GM announced plans earlier this month to start building environmentally-friendly hybrid cars in China in the next couple of years.

"What we're trying to do is grow faster than the market," Wale said.

GM is also planning to introduce other models from its stable to the Chinese market, including the Cadillac SLS and the Buick LaCrosse, both of which have been tailored differently for the Chinese market.

GM's vehicle portfolio in China currently totals 32 different models, which range in price from 4,000 dollars for a compact van made by Wuling, one of GM's key Chinese partners, up to the 120,000 dollars for the luxury Cadillac XLR.

"We respect the competition. We don't take any of our competition lightly," Wale said.

Nick Reilly, GM group executive for Asia Pacific, said GM has positioned its Cadillac marque at the top end of the market in a bid to steal share away from other premium brands such as BMW and Mercedes-Benz.

Buick, which has made significant inroads into China since it was first introduced in 1999, has been positioned for the middle market, while Chevrolet is aimed at the lower, more affordable, end of the market, GM executives said.

The multi-brand strategy is key to GM's effort to stave off the intense competition it is facing from rival Asian vehicle makers including Toyota, Honda and Hyundai, which are also expanding fast into China.

Reilly said that going forward, GM will also focus on developing smaller, nimbler vehicles.

"We have to compete in the low end of the market," he said.

"That's a change in direction for us. If we're going to compete in China, we're going to have to compete at the low end," Reilly said.

GM is also vying to use its Chinese manufacturing operations as export hubs for other emerging markets, partly as it can build cars there more cheaply than it can in the United States.