Detroit-based automaker General Motors Co. (GM, Financial), in collaboration with it joint ventures in China, sold a record 287,581 vehicles in July, up 6.3% year over year. However, the company’s year-to-date sales in China have plunged 1.3% to 2.05 million vehicles compared with the same period in 2016. Cadillac sales powered the company’s growth in China in July as more Cadillacs were sold there than in the U.S.
Besides Cadillac, its Buick, Baojun and Chevrolet brands posted strong performances in the mainland, reaching all-time highs for July sales.. The company achieved growth across all segments, but SUVs stole the show with staggering growth of 50% in China.
Cadillac: GM’s powerhouse
A positive point for the company is Cadillac is performing well outside its domestic market, particularly in China. Cadillac sales amounted to 308,718 vehicles last year, which is below the 360,825 unit mark it hit back in 1978. During that period, 97% of Cadillac sales were made in the U.S. Now, the U.S. accounts for only 55% of total Cadillac sales as of 2016. As a result, China has become a crucial market for General Motors.
Cadillac is also slowly gaining traction in Russia, Western Europe, Korea and the Middle East. The company’s plan is to strengthen its portfolio by launching the XT4 crossover in 2018 and the XT6 in 2019.
How GM’s other brands fared
Cadillac’s sales grew an astounding 37% year over year to 12,006 units, marking the brand’s 17th successive month of double-digit growth. The company sold more that 4,000 XT5 luxury SUVs. Sales of the ATS-L surged 66% from last year, making it the company's most popular model for July. CT6 prestige sedan deliveries skyrocketed 181% year over year. A combination of these factors helped Cadillac shine for General Motors. Year to date, sales grew 69%.
Buick remains the company’s most profitable and best-selling brand in China. Buick sales improved 4.4% to 93,347 units. Envision sales exceeded 13,000 units. The GL8 MPV family witnessed 55% sales growth from the same period last year, boosted by the robust performance of the new-generation GL8 and GL8 Avenir. LaCrosse sedan sales swelled 77% year over year to nearly 7,000 units. Year to date, Buick's sales are down 6%.
Chevrolet sales improved 23.8% in July due to strong sales of the midsize Malibu sedan. The Malibu contributed more than 25% to the brand's overall July sales. Cavalier sedan sales reached approximately 10,000 units. Equinox sales totaled 3,500 units for the month.
Baojun dominated in China as sales surged 61% to over 71,000 units. The gain is attributable to the 510 SUV, whose sales volumes stood at more than 27,000 units. While Baojun 310 recorded deliveries of 6,500 units in July, the Baojun 310 wagon sold more than 6,100 units in its very first month in China.
While all other brands reported sales growth, General Motors’ Wuling brand posted a 25% sales decline in July and an 18% sales decline on a year-to-date basis. Wuling’s main focus is to break into the passenger car market in China. As a result, the brand’s first SUV will join the Hong Guang lineup later this year.
Last word
General Motors bounced back after witnessing slumping sales at the start of the year due to an increase in China's tax incentive. The company’s year-to-date sales plunged 1.3% from last year. Despite these factors, the company managed to improve its bottom line considerably. The automaker generated $509 million equity income from its Chinese joint ventures in the second quarter versus $471 million in the previous year. With sales of larger vehicles remaining robust, General Motors should witness strong results in the third quarter.
Disclosure: I do not hold any position in the stock mentioned in this article.
