General Motors (GM, Financial) and Ford's (F, Financial) growth in the world’s largest auto market, China, has slowed in the recent months. Increasing popularity of indigenous Chinese auto brands and slow economic growth in the country have impacted the Western automakers.
General Motors’ deliveries was down 0.4% and the demand for its Buick and Chevrolet brands declined drastically, while Ford saw flattish sales in China last month. On the other hand, domestic automakers stole the show and are eating into the market share of these foreign players. Here’s a detailed look at the performance of General Motors and Ford in the emerging market.
Sluggish numbers for the Detroit players
Stunted growth in China’s economy for the fourth straight quarter led to slow car sales in April. In fact, the month saw the slowest growth in last two years with a record low 1.3% rise. As such, though General Motors and Ford posted a strong month in the domestic market, China was a drag on the overall sales figure.
The largest US automaker, General Motors, said it sold 258,484 vehicles in collaboration with its Chinese joint ventures, down 0.4% from the same period last year. GM’s strongest brand in China, Buick, witnessed sales decline of 8.5% to 63,307 vehicles, while the sales of Chevrolet plunged 5.6% to 49,528 vehicles. Cruze sales came in at 19,836, which turned out to be its best selling model for the month of April. The sales of Cadillac surged 4.6% to 6,197 units.
As China is the most lucrative international market for General Motors, the carmaker is upping its ante in the nation. The company is planning to invest $16 billion to compete with competitors more effectively and boost its market share in China by 2020.
Ford Motor sold 96,889 vehicles in China. This was just 60 units higher than what it sold last year same period. Plunging sales of commercial vehicles was balanced by robust sales of passenger cars. Overall, Ford’s sales stats in the country remains unchanged.
In the recent past, the Blue Oval has put in billions in strengthening its manufacturing base in China. The company has also leapfrogged its Japanese counterpart Toyota Motor (TM, Financial) in sales there. In March 2015, Ford started its sixth assembly unit in the country to augment its annual capacity by 250,000 vehicles.
Other foreign players
In contrast, Japanese auto giants Toyota and Honda (HMC, Financial) reported robust gains for the month with sales surging 8% to 92,600 vehicles and 12% to 71,550 units, respectively. Toyota’s sales rise is attributable to Corolla sales that soared 80% to 22,000 units and RAV4 sales that jumped 30% year on year. Honda’s sales figure was supported by its two new SUVs. Nissan’s (NSANY, Financial), on the other hand, saw its sales plunge 19% to 95,500 units.
Last word
An IHS Automotive researcher aptly concludes the present auto scenario in China, saying, “The momentum for auto sales is slowing down, it’s getting tougher for foreign automakers.” The intensity of competition in the market is rising. This coupled with slow economic development makes it quite challenging for carmakers. While the domestic automakers have done well, it’s time for the foreign automakers to pull up their socks and become competitive. It would be worth seeing whether General Motors and Ford sales improve over the next few months. Will these automakers record another set of depressing numbers or be able to compensate for the April lull, remains to be seen.
