General Motors (GM, Financial) saw its steepest sales drop in five months in the world’s largest car market: China. The automaker has been struggling to pull up volumes amid economic slowdown in the country. The company’s stock trended lower as its sales dipped 4.8% in China and the company’s strong exposure to the car market raised investor concern. General Motors is among the carmakers that have moderated their China forecast after pouring in billions to build massive facilities in the country. Let’s take a look at the top Detroit automaker’s performance in comparison with its peers.
A look at the numbers
In 2015, China is forecast to witness the slowest growth pace it has seen in the past 25 years. The country’s stock markets have fallen around 40% in the past two months. General Motors, along with its joint ventures in China, delivered 248,815 vehicles in August, down 4.8% compared with last year same period.
According to the company, the “softness in the overall vehicle market” is the reason behind such depressing volumes. General Motors’ China President Matt Tsien continues to be confident about the company’s prospects. He said, “… we have remained focused on providing great products designed for China to meet the needs of our customers… Recently launched models such as the Buick Excelle GT and Cadillac ATS-L have been well received by consumers and produced solid sales growth.”
In August, strong demand for various SUV and MPV models offered by GM somewhat compensated for the overall sluggish market. The Buick Envision and Baojun 560 saw stunning sales growth of 161.7% which led the company’s SUVs business report good numbers during the month. Sales of the Baojun 730 MPV also came in strong and more than doubled.
According to the China Association of Automobile Manufacturers (CAAM), the economy’s auto industry sales through July saw a marginal improvement of 0.4% compared with last year. The association is expected to release the August stats soon.Â
Performance of other automakers
Ford (F, Financial) and Nissan (NSANY, Financial) had a poor month with contracting sales. But the figures were a big contrast to those reported by Toyota (TM, Financial), Honda (HMC, Financial), and Mercedes. Even amid fading consumer demand, these carmakers were able to record significant sales gain driven by their fresh line of products to lure buyers. Mercedes gave a facelift to many of its offerings, which helped it record 53.1% higher deliveries last month. Other German heavyweights including BMW AG and Volkswagen’s (VLKAY, Financial) luxury unit Audi also revamped their products.
Last year, Japanese carmakers Toyota and Honda introduced several SUVs that have sold like hot cakes in China. IHS Automotive forecasts the SUV segment to grow over 20% in the current year, even though the overall auto market’s growth is expected to be flat.
Last word
General Motors sells more vehicles in China than it does in the U.S. Evidently the automaker is trying to play catch up with its counterparts that are recording gains even in a soft market. For now, the automaker has toned down its forecast for sales growth in China from 8% to 6%. The company is under some pressure with sales continually dropping due to the China slowdown. This has also become a cause of concern for investors as General Motors expects a lot of its future growth to come from this market. How soon will the top American automaker see its sales improve in China? Only time will tell.
