General Motors (GM, Financial), in collaboration with its joint ventures in China, put up a record show. The automaker’s deliveries surged 18% to 293,537 vehicles for the month of August. Considering the first eight months of the year, General Motors' sales grew 8.1% to a record 2,374,582 vehicles in partnership with its Chinese colleagues.
What powered the company’s delivery volumes in August were the strong sales of its brands Buick, Chevrolet, Baojun and Cadillac. Matt Tsien, GM executive vice president and GM China president, said, “Our mainstream passenger car entries drove our sales momentum…We are looking to build on our success by adding another five new and refreshed models in the final four months.” The company is building its strategies to cement its dominance in the mainland, considering the growth prospects the emerging market offers. Here’s a brief look at the Detroit automaker’s performance in its largest international market.
GM Brands Shine Bright in China
Cadillac witnessed sales growth of a monumental 93% year-over-year in August to 9,914 vehicles. The sales gain is attributable to the huge volumes of sales of ATS-L luxury sedan as well as XT5 luxury crossover. The deliveries of each of these cars exceeded 3,000 units. Moreover, deliveries of its big XTS surged 65% from the same period last year.
Buick also recorded an impressive sales gain of 23% to 94,188 units in August. The sales gain was powered by Excelle GT sedan. Sales of Envision SUV climbed 53% year-on-year. Verano witnessed sales exceeding 13,000 units. These gains lifted Buick’s performance on the whole.
Chevrolet delivered 38,706 units in August. This was primarily led by the solid sales of Cruze. Cruze deliveries went over 19,000 units for the month. General Motors is planning to launch the sixth generation of its iconic Camaro muscle car later in September.
Baojun delivered more than 51,000 units in August, thereby representing an increase of 41% as compared with last year. Baojun 730 MPV posted sales gain of 37%, whereas Baojun 560 SUV witnessed sales gain of 52% from the same period last year. Wuling also continues to grow though China remains a challenging market with regard to mini commercial vehicle segment. Its deliveries spiked 8% year-over-year to 99,589 units on the back of robust performance of Hong Guang MPV family.
Looking Ahead
While General Motors is performing well considering the sluggish Chinese economy, the company is facing challenges that need to be addressed. In order to boost its sales and sustain significant market share, the company is looking to launch five revitalized models in the last quarter of the year. General Motors will be trying to maintain its sales momentum, but there exists the concern of increasing competition from local Chinese auto players that are offering highly competitive prices. Not only this, domestic players are exceling in the low-priced car segment and are thus able to penetrate in potential market areas with low car ownership rates.
Such competitive rates are putting pressure on GM's bottom line. However, the growing popularity of the company's high-margin Cadillac models and the high-volume sales of mass models should give the company room to offer more competitive prices to sustain its market position. It will be interesting to see how the changing dynamics of China with increasing competition impact General Motors third quarter results.
Disclosure: I do not hold any position in any of the stocks discussed in this article.
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