GM's First-Half China Sales Surge Past the U.S.
GM's first-half China sales surge past the U.S.
Kevin Lee/Bloomberg
President and managing director of General Motors China Inc. Kevin Wale speaks to the media at the launch of General Motor Co.'s Buick Excelle XT in Shanghai.
President and managing director of General Motors China Inc. Kevin Wale speaks to the media at the launch of General Motor Co.'s Buick Excelle XT in Shanghai. Photographer: Kevin Lee/Bloomberg
July 2 (Bloomberg) -- Bloomberg's Deirdre Bolton reports on the latest breaking news and top stories in today's Business Briefs. (Source: Bloomberg)
General Motors Co.’s first-half sales in China surpassed those in the U.S. for the first time as the world’s fastest-growing major economy propelled global auto demand.
Sales in China by GM and its joint ventures totaled 1.21 million vehicles in the six months ended June 30, topping U.S. deliveries of 1.08 million, based on figures reported separately by the Detroit-based company. This would be the first time any overseas market has “consistently outsold” GM’s domestic market in the carmaker’s 102-year-old history, said Michael Albano, a Shanghai-based spokesman.
Surging demand among China’s 1.37 billion people is speeding automakers’ recovery after a recession cut global auto sales last year and forced GM’s predecessor, General Motors Corp., into bankruptcy. GM is counting on expansion overseas to bolster profit as it prepares for an initial public offering as early as the fourth quarter.
“China is one of GM’s bright spots globally,” said John Zeng, a Shanghai-based automotive analyst at IHS Global Insight. “GM has done a better job in the Chinese market than other American automakers. The huge potential in this market will continue to fuel GM’s growth here.”
Government stimulus measures helped China’s industrywide vehicle sales jump 46 percent last year to 13.6 million, surpassing the U.S. for the first time to become the world’s largest national automobile market. U.S. auto sales fell 21 percent to 10.4 million, the fewest since 1982, as unemployment rose amid the worst recession in six decades.
China Venture Partners
GM makes vehicles including Buick Excelle and Regal cars as well as Chevrolet Lova compacts with its Chinese joint-venture partner SAIC Motor Co. It also makes Sunshine minivans at SAIC- GM-Wuling Automotive Co.
The SAIC-GM-Wuling venture’s deliveries, which are included in GM’s monthly sales reports, are excluded from tallies by some industry analysts because GM owns 34 percent of the venture, while SAIC Motor has a 50.1 percent stake.
GM and its partners aim to boost vehicle sales in China to 3 million a year by 2015 from 1.83 million in 2009, Kevin Wale, president of the carmaker’s China business, has said. The company estimates it will top 2 million sales in the country this year.
GM’s June deliveries in China rose 23 percent from a year earlier to 176,486 units, the carmaker said today. The company plans to introduce 25 new or updated models in the country by the end of 2011, including its Chevrolet Volt plug-in car, it said in April.
Energy Subsidy
GM’s four ventures with SAIC Motor Corp. were among companies approved for a Chinese government energy-efficiency subsidy, the Ministry of Industry and Information Technology said on its website today.
Full-year auto sales in China may rise 17 percent this year to 16 million, according to the State Information Center, even as growth may slow in the second half.
The rate of expansion in auto demand slowed in April and May as prices for gasoline, consumer goods and real estate rose. The government raised the consumption tax on small vehicles to 7.5 percent in January after cutting it in half to 5 percent last year.
In the U.S., GM and Ford Motor Co. reported June sales that fell short of analyst estimates as consumers concerned about unemployment and the economy avoided large purchases. A 9.7 percent jobless rate and continued lower home prices have reduced consumers’ confidence and are keeping them out of showrooms, dealers and analysts said.
Home Market
GM’s sales in its home market last month rose to 195,380, an 11 percent increase from a year earlier, which trailed the 16 percent average growth estimate of six analysts surveyed by Bloomberg.
Industrywide U.S. deliveries in June reached an annualized rate of 11.1 million vehicles, according to Woodcliff Lake, New Jersey-based Autodata Corp. The figure trailed the average estimate for an 11.2 million-vehicle pace and is a drop from 11.6 million in May.
GM’s predecessor entered bankruptcy on June 1, 2009, and the new company emerged in July 2009. The carmaker reported first-quarter net income of $865 million this year, helped by higher production and smaller discounts. Chief Financial Officer Chris Liddell on May 17 called the profit a “good, useful step” toward an IPO.
The automaker’s equity is worth $70 billion, according to a May 20 report by Eric Selle, a JPMorgan Chase & Co. debt analyst who projects a return of 47 cents on the dollar for holders of bonds issued by General Motors Corp. that will be converted to stock and warrants in new GM. At yesterday’s bond prices, GM’s equity is worth about $47 billion.
GM posted operating profit of $1.2 billion in the first three months as revenue rose 40 percent from a year earlier to $31.5 billion.
--Tian Ying, Liza Lin, with assistance from Zhe Huang in Beijing. Editors: Terje Langeland, Ian Rowley, Jamie Butters.
To contact the reporter on this story: Liza Lin in Singapore at llin15@bloomberg.net
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