GM Launches 'Product Offensive' in China

Nov. 21, 2008
Will exhibit 24 models at this week's Guangzhou International Auto Show

General Motors has begun unveiling an unprecedented number of new models in China, where it has gone on the offensive as it faces bankruptcy at home. GM and its local partners are trying to keep an edge in China, the world's second largest market after the U.S., as they exhibit 24 models at this week's Guangzhou International Auto Show.

"The vehicles on display are part of a product offensive that will see us roll out an unprecedented number of new and upgraded models over the coming two years," GM's China chief Kevin Wale said. GM's new offerings for the Chinese market include the Buick Enclave SUV, Chevrolet Cruze sedan and Cadillac CTS-V.

Although growth is slowing in China, the market is crucial for GM, which sold more than 60% of its cars outside the U.S. in the third quarter. Between July and September, GM's worldwide sales fell 11.4% to 2.12 million vehicles.

More than a tenth of those were sold in China where sales grew 12% year-on-year to more than 240,350 units, according to company figures. In the first nine months the company said it sold 830,480 vehicles, up 10.2% from last year.

China is expected to overtake the U.S. as the largest auto market by 2015 and growth potential is huge with only 20 people for every 1,000 owning a car, compared to 700 per 1,000 in the U.S., according to market researchers TNS.

But experts also say car companies cannot expect China, whose economy is less than a third that of the U.S., to offset the troubles they face in Europe and North America. GM is the largest of the three big U.S. automakers and the strongest in China, where it was the market leader until last year when it was overtaken by Volkswagen in sales. Although its sales continue to grow in China, some rivals are outpacing GM. Honda said on Nov. 19 its China sales for the January-October period increased by 17.9% to nearly 392,000 vehicles.

Ford, which launched new versions of its Fiesta compact and Volvo brand S80 sedan, said its financial troubles in the U.S. would not affect its expansion in China. Ford said its decision to exhibit the Fiesta in Guangzhou first "signals the importance of China and the Asian region in Ford's global strategy," Ford Asia Pacific and Africa vice-president John Parker said. Ford will reinvest profits from local operations to build its presence in China.

The current Chinese market presents its own set of challenges for automakers. Expanded capacity at a time of slowing demand means the number of unsold vehicles are at their highest levels in years. Since September, companies have had to slash prices and production, and sales are widely expected to slow to about 6% next year. But China remains a market where companies can grow.

Copyright Agence France-Presse, 2008

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