GM China Ignores Akerson, Makes Volume With Wulings
GM’s U.S. sales get the headlines, GM’s volume is a Chinese import: In the first seven months of the year, GM sold 1.6 million cars in China, versus 1.5 million back home. GM’s Chinese sales data deserve more than a cursory look. Let’s look.
GM and its Chinese joint ventures sold 199,503 units in July, up 15.1 percent for July 2011, says GM in a press release. This bodes well for the Chinese market as a whole: In the past, GM’s Chinese sales have been a good leading indicator.
Things are not as rosy as the headline number suggests. Most of the growth comes from the three-way joint venture SAIC-GM-Wuling, where GM now holds a 44 percent share. Wuling is famous for its Sunshine delivery van. Wuling recently made headlines by dropping the price of its best-seller to $4,400. The segment is under pressure, and volume is made with heavy discounting.
Shanghai GM’s profitable sales of Buicks, Chevrolets and Cadillacs are up only 5.7 percent in July, and 6.5 percent for the first seven months.
Last year, Dan Akerson said in an Interview with Fortune:
“I’d rather be the most profitable in terms of margins. To produce the most cars — quite frankly, that’d be pretty easy. Overproduce and no margin. That’s not the game we’re trying to play.”
Really? Most of GM’s volume growth in China, and half of GM’s Chinese sales are made with something that did not make much money in the first place, and that now could lose money with every sale.
PS: GM’s reporting of Chinese data (black numbers in the table) has improved recently. It could be better. Most year-to-date numbers (blue) had to be recalculated. And sometimes, GM can’t help it: When a number is less than stellar, such as the Cadillac sales in July (down 15.7 percent by our calculation,) GM just drops the number. Why, GM? Would you rather have the number calculated by TTAC?
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Where did the GM Spyker lawsuit topic go?
1- What data do you have to support the notion that Wuling sales are loss making? (I know you have no idea really!) 2- Akerson's comment related to the richest market region in the world, North America. In the pre-bankruptcy days, GM (along with Ford & Chrysler to a lesser degree) had to pay the UAW folks, whether there was work for them, or not. That reality drove the "discount to create volume" behavior of the past. GM is clearly not doing that in America now, and is generating great profits here.