GM's May China Sales Rose at Slowest Pace in 14 Months on Mini Vehicles

General Motors Co., the best selling overseas automaker in China, said sales in the nation rose at the weakest pace last month since March 2009, as growth slowed at its SAIC-GM-Wuling Automotive Co. joint venture.

GM and its partners in China sold 196,004 vehicles in May, an increase of 25.4 percent from a year earlier, the company said in an e-mailed statement today. Its rate of growth was in line with the wider passenger-car market, which grew 25 percent to 885,000 vehicles in May, the China Automotive Technology & Research Center said on June 1.

Falling stock prices and rising inflation are eroding wealth in the world’s largest automobile market. Meanwhile, buyers are becoming cautious after the government introduced measures to clamp down on a property market bubble, said Yale Zhang, a Shanghai-based director at CSM Asia, an automotive consulting company.

“This is not a single carmaker’s problem, it’s the market’s problem,” Zhang said in a phone interview today. After record-high sales last year demand growth is getting weaker each month, he said

Liuzhou-based SAIC-GM-Wuling, which accounts for over half of GM’s China volume, increased sales by 5.2 percent to 105,395 units in May, GM said. That’s down from an 18.9 percent increase in April, 42.6 percent in March and a gain of 37.7 percent in February, according to GM’s website.

$4,000 Mini Vehicles

The partnership, which sells mini vehicles including Sunshine vans for as little as $4,000 each, is 34 percent-owned by the U.S. automaker. SAIC Motor Corp., China’s largest domestic car company, owns 50.1 percent and Liuzhou Wuling Automotive Co. owns 15.9 percent.

The unit’s relatively low growth is explained by strong sales in the month a year earlier, CSM Asia’s Zhang said. New models may help GM may do better than other carmakers this year, he said.

Sales at Shanghai General Motors Co., a venture with SAIC Motor, which makes Buicks in China, rose 48.7 percent from a year earlier to 83,302 units, according to the statement.

The 25 percent growth rate for Chinese passenger car sales in May compares with April’s 34 percent advance, according to the automotive center.

GM China President Kevin Wale said last month that while the country’s car sales growth will slow this year, the automaker is keeping a forecast to sell than 2 million cars this year.

‘Industry Cycle’

Weaker growth is “a natural part of the industry cycle,” Wale said at a conference in Ningbo, a city in the eastern part of China, on May 16. “Underlying demand is very strong.”

GM and its partners in the nation sold 1.03 million units in the first five months of the year, an increase of 53.9 percent from a year earlier, the Detroit-based company said today.

China, which overtook the U.S. as the world’s biggest auto market last year, is GM’s largest market. The carmaker aims to sell 3 million vehicles a year in China by 2015. It plans to introduce 25 new or updated models in the country by the end of 2011.

To contact the reporter on this story: Liza Lin in Singapore at llin15@bloomberg.net

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