Auto Sales at a Crawl, GM Surges Forward

More car makers are gearing their designs towards China’s auto market, and is no exception. Despite the slowdown in China’s auto industry, GM has profited with record auto sales in May. AFP reports:

GM’s sales in the country surged 21.3 percent in May from the same month last year and rose 1.7 percent from April, it said in a statement.

For the first five months of this year, GM sold around 1.2 million vehicles in China — also a record — up 11.5 percent year on year.

State media has said policymakers are considering reviving favourable policies for the auto sector by offering subsidies to buyers of smaller vehicles in rural areas to help boost consumption and spur the economy.

GM sold more than 2.5 million vehicles in China last year.

According to the Wall Street Journal, demand for a joint local venture produced minivan boosted overall sales:

SAIC-GM-Wuling—the auto maker’s microvan joint venture with Shanghai Automotive Industry Corp. and Liuzhou Wuling Motors Co.—reported a 34% sales increase during the month to 119,721 vehicles. GM’s flagship Shanghai-GM passenger vehicle joint venture with SAIC posted a 7.1% rise in sales to 99,113 vehicles.

Cadillac sales, in contrast, fell 2.2% in May from a year earlier to 2,205 cars. The decline came as BMW AG said Tuesday its sales rose 32% from a year earlier in May to 27,185 cars, and Volkswagen AG’s Audi brand sold 36,278 cars in May, a 44% rise.

Yale Zhang, managing director of Automotive Foresight, a consultancy, said Cadillac’s weak showing reflects the brand’s status as a relative newcomer in the market. The company’s SRX crossover vehicle “is still in the early stage [in China],” Mr. Zhang said, adding that a narrow range of offerings in China puts Cadillac at a disadvantage compared with its European rivals.

Cadillac’s performance aside, stronger sales growth by major auto makers may be an encouraging sign for the country’s as a whole, particularly if the government adopts new stimulus measures, including a looser monetary policy and lower fuel prices, to jump-start economic growth, Mr. Zhang said. Toyota Motor Co. said on Monday its sales in China more than tripled to 79,000 vehicles in May as it recovered from the effects of last year’s earthquake and tsunami.

While GM’s sales are growing, , however, is suffering from the slowdown. The car maker had its sights on the Chinese market via Hong Kong, but are now changing course to aim at inland provinces. Previously, sales in rural areas had boosted China’s auto market. From Reuters:

Nissan Motor Co, Japan’s No.2 automaker, expects auto demand in China’s inland provinces to help offset anaemic sales on the Chinese coast.

Declining sales in the world’s second-biggest economy may slow Nissan’s push into overseas markets, including Russia and Brazil, that helped drive the automaker’s global sales to a record in the last financial year ended March.

“Increasing demand from inland China is offsetting (weak demand in coastal regions), and we have barely seen growth in overall Chinese demand compared to the previous year,” Kimiyasu Nakamura, president of Dongfeng Motor Co, Nissan’s joint venture with Dongfeng, said at a press conference in Tokyo.

Car sales in China climbed 5.2 percent in 2011, the slowest pace since the turn of the century, as consumers shunned local brands after Beijing scrapped tax incentives for small cars.

Read more about China’s auto market, via CDT.

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