GM aims for top spot in China at VW's expense
Thu Jan 5, 2006
By Fang Yan
SHANGHAI (Reuters) - General Motors Corp. (GM.N: Quote, Profile, Research) may have unseated Volkswagen A.G. (VOWG.DE: Quote, Profile, Research) as the top foreign seller in China in 2005, outpacing its European rival as well as overall sales growth in the world's third-largest vehicle market.
The U.S. auto maker posted a 35 percent rise in China sales to 665,390 vehicles in 2005, exceeding the combined 564,300 units sold by Volkswagen's two Chinese joint ventures.
However, an exact comparison was difficult because of differences in the way the companies report sales. GM figures include sales from a commercial vehicle tie-up that markets a local brand while VW figures do not include imports.
Analysts said a more diversified slate of vehicles had helped GM, which has been gaining on Volkswagen in China for years, and the improved sales growth provides much-needed momentum for the beleaguered U.S. auto maker, which has been losing market share in its home market.
"GM has a more diversified product portfolio in China," said Jia Xinguang, chief analyst with China National Automotive Industry Consulting. "That helped to pump up sales even when market growth was slowing."
By comparison, European car makers have opted for more streamlined portfolios, analysts said.
They said VW's commitment to two separate car ventures have also pushed up operational costs and made it less responsive to market needs.
Sales at its flagship joint venture with top Chinese car maker Shanghai Automotive Industry Corp. (SAIC) alone fell 19 percent to 287,000 units last year, an executive at the venture told Reuters.
"VW in China is pretty much like a husband with two wives," said analyst Zhang Xin with Guotai Junan Securities, describing the awkward situation with the two joint ventures.
Still, car sales throughout the nation have been slowing. Analysts said total sales last year were expected to have grown just 10 to 15 percent, matching the growth of 2004 but well off the doubling seen in 2003, due in part to Beijing's crackdown on easy auto credit to help cool an overheating Chinese economy.
SLUGGISH HOME MARKET
GM's sharp growth in China comes at a time when the U.S. giant is facing a deepening financial crisis and a sluggish home market, where December sales fell 10.2 percent and slipped 4 percent last year.
The picture is vastly different in China, where GM said sales at its joint venture with SAIC -- which makes Buick and Chevrolet brands -- jumped 28.7 percent to 325,429 units last year.
Its market share in China rose to 11.2 percent at the end of 2005, up 1.8 percentage points from a year earlier, GM said.
Volkswagen is estimated to have commanded a quarter of China's auto market in 2004, but that figure drops to about 13 percent if all vehicles from trucks to buses are included.
Officials at the German firm declined to comment, saying they were not prepared to release any sales figures yet.
The Detroit-based giant expects its China sales to beat industry unit sales growth of 10 to 15 percent for 2006, Kevin Wale, its top executive for the country, told Reuters in November.
But analysts warned that GM should also keep a close watch on its Asian rivals, as Toyota Motor Corp. (7203.T: Quote, Profile, Research) is quietly catching up.
In China, Toyota expects sales to jump 54 percent to 179,000 units in 2005, company executives have told Reuters, with sales at its local venture expected to grow about a third in 2006.
Hyundai Motor Co. (005380.KS: Quote, Profile, Research), set to build a second Chinese plant with its local partner, has announced it aimed to more than double its China sales to 1 million units by 2008.
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