Have a quick look at this screenshot. Scan it as quickly as you scan other news from China. Now picture scanning it under as much time pressure an average news editor is under. That’s what this is for, it is GM China’s site for journalists. Wouldn’t you think that GM China’s January sales were absolutely marvelous?

Well, it’s not true. GM China has seen better months than this horrible January which in all likelihood will bring double-digit declines to China’s car industry. Is GM China simply saying: Ouch, better luck in February? No, it has the urge to spin:

“Shanghai – General Motors sales in China in the first month of 2012 were up 25.3 percent from December 2011, giving GM its second-best January ever in China.”

Well, it just so happened that GM’s best January ever had been January 2011, and second best means in this case that year-on-year, GM China sales are down 8 percent. Which was buried in the body of the release, likely banking on rampant attention deficit.

Will they ever stop playing people for fools? Apparently not.

What’s wrong with telling it as it is? Does every month have to be a record?

Here is the TTAC-recommended format:

P.S.: If the columns don’t add up sometimes, don’t blame me.

P.P.S.: GM, when you say “Wuling sales of 106,573 units in China  …” without giving a percentage of growth or a prior year number, the trained journalist will know you are fibbing …

New car sales in China imploded in January. This will be the message when the official data by the CAAM are announced. Which should happen any minute.

The signs are ominous: Yesterday, GM China, TTAC’s in-house leading indicator, announced (in a way) that sales in January had been down by 8 percent. Then, China’s largest carmaker SAIC said that its January was down 8.5 percent. Today, the China Passenger Car Association told China Daily that the car market in China had nosedived16.5 percent from a year earlier to 1.17 million units in January. Late in the afternoon in Yokohama at Nissan’s quarterly earnings conference, Nissan’s Corporate Vice President, Joji Tagawa proudly pronounced that Nissan sales “declined only 16 percent” in China, while the Chinese car market as a whole registered “a negative 28 percent,” and isn’t that wonderful?

Whoa!!!! What’s going on?

Is the sky over China finally falling? It sure looks like it. Unless you are one of the 1.3+ billion chosen few who own a Chinese calendar. Then you would know that for the better part of January, China was closed.

It happens every year. A phenomenon called Chinese New Year causes hundreds of millions to travel, to set off fireworks, and to paralyze commerce for weeks on end. Officially, Chinese New Year started on January 2012 and lasted a week. Unofficially, it can last a month. Picture Thanksgiving, Christmas, Easter, Hanukkah and Ramadan all rolled into one, and you’d be covering only a tiny part of what is Chinese New Year.

Now comes the really interesting part: Last year, Chinese New Year fell into February. With the result that February 2011 was a dud, car-wise, after January had been stellar.  This time around, we compare an emaciated January with a prior year January on steroids. Next month, it will be different, when sales will be compared to the dud month in the prior year. Which causes Rao Da, secretary-general of the passenger car association to glibly remark that he expects an increase of around 30 percent in February.

All I can recommend: Ignore any numbers coming from China in January or February, especially percentages.

I assume the Kilpatrick Townsend & Stockton law firm that handles Chrysler’s trademark litigation is already on its way to China. If not, they will be calling the travel agent after reading this.

What do you think would happen if Chrysler would license its Jeep brand to a beer? It appears as if Chrysler did just that in China. I assume there is no such license, but appearances are everything.

The beer is marketed by the “Hubei Jeep Brewery Corporation.” Distributors who sell more than 60,000  liters are eligible to win a free green Jeep. Call +86-716-4735359 for details.

Not enough that Jeep’s brand is being blurred and diluted by beer, the Hubei brewery manages to upset yet another famous brand. Avowed Dutchman Tycho de  Feyter, who blogs about Chinese cars and Chinese copies at Carnewschina, is aghast to note that “stealing Jeep-things for beer is really bad, but what really pisses me off is that they also copied the famous tilted ‘e’, the red star, and the label’s overall design from the great beermaker Heineken from the Netherlands, my Home Country! That ‘e’ alone has been copyrighted a zillion times!” Not copyrighted, but the tipsy e in Heineken definitely is trademarked. Heineken has a presence in China, and probably a better case than Jeep.

The Hubei beer company has more interesting beers. Its AOBULL beer, picturing a red bull, could attract the attention of the energy drink – if that drink would not already be fighting an epic trademark battle against a Chinese company that sells fake Red Bull. The “German Soldier” beer should not cause trouble. Tycho remarks snidely that it should “mix fine with a Jeep.”

How do you say “grace, pace and space” in Mandarin? Jaguar Land Rover is apparently partnering with Chinese automaker Chery to build cars in China. While an announcement wont come until April’s Beijing Auto Show, the two companies have applied for permission from China’s regulators.

Jaguar Land Rover sales are up in China by 92 and 63 percent respectively, and the country is on pace to become one of the top 3 markets for both brands. Locally built cars would avoid hefty import duties and allow for extra supply. Some smaller displacement engines for Jaguar (such as the 2.2L diesel) will be necessary to help boost sales, and don’t be surprised if we see a crossover at some point in the future.

Tycho, my Dutch friend in Beijing, scored the big one with his fake F150 story. After we wrote about it, everybody from  Motor Trend to Pickupinfo.ru wrote about it as well, taking the Carnewschina.com server on a shakedown tour. Tycho does what a good journo needs to do: Feed the beast. He found even better pictures of the pseudo Ford. And he found imagery of its older brother. Which is a Chevy copypaste.

JAC’s Ford-clone JAC 4R3 pickup truck is not available yet, and will be shown at the Beijing auto show end of April. JAC is headquartered in the village of Jingxin in Hebei Province. Villagers there are fiercely loyal to their largest employer, and when uncamouflaged preproduction models of the JAC 4R3 showed up — pictures of the truck appeared minutes later on the Internet.

Tycho has a whole collection, courtesy of the fiercely loyal villagers

On further digging, Tycho unearthed that the truck’s older brother also looks like a Detroit lovechild. According to a new report in Carnewschina, “the JAC 43R is based on another existing JAC pickup truck, the JAC Ruiling. The Ruiling, meaning ‘Lucky Bell’, is a copy of the 2003 Chevrolet Silverado, with a Ford-style oval on the grille.”

Some commenters think it looks more like a 2005 Chevy Colorado. Opinions?

American carmakers cast worried glances on Senators and union groups that want to create a level playing field with China. Senators Debbie Stabenow and Sherrod Brown, alongside union representatives and the labor-backed Economic Policy Institute try to push “the administration to bring a possible case at the World Trade Organization or begin a U.S. Commerce Department investigation that could lead to duties on Chinese-made auto parts,” as Reuters reports.

A study by the EPI alleges that the Chinese auto parts industry has received $27.5 billion in government subsidies since 2001. The study forgets that large parts of the U.S. auto industry would not be here anymore, would it not have been bailed-out by the U.S. government.

Why are carmakers horrified by the surely well-meant suggestion? Several reasons:

• Global parts sourcing, especially in China, has helped carmakers the world over to lower production costs. Slapping a punitive tariff on Chinese parts would raise the price of the parts, and make the car uncompetitive. First customers, then UAW members would pay the price for the folly.
• But wouldn’t it bring jobs back to America? The experience with the tire tariff, enacted on instigation of the United Steelworkers, says otherwise: The production of cheap tires simply moved from China to Thailand. From there, the tires could be imported at a lower tariff than from China, for a while even duty-free. Not a single job was created in America with the tire tariff, but a lot of porcelain was broken.
• As the volcano in Iceland, the tsunami in Japan, and the flood in Thailand have shown, the supply lines of the auto industry are intricate and can be easily damaged. Meddling with parts imports from China could have catastrophic effects on the U.S. car industry. By the time large swaths of the Chinese parts industry have been relocated to even cheaper parts of the world, U.S. manufacturers would be out of business, its people would be out of work.
• Especially GM is inseparably tied to China. More than a quarter of GM’s global production is sold in China, GM’s largest single market. Ford is expanding its presence in China. Chrysler hopes to get back into China on the coattails of Fiat. These companies would be on the receiving end of retaliatory measures by the Chinese government.

It is not that the lawmakers and union officials are utterly naive. They know that most of the Chinese parts production was created if not by, then at the behest of foreign carmakers, U.S. and otherwise. Bob King, president of the United Auto Workers union, acknowledges this by urging “global corporations to refrain from a ‘race to the bottom’ to find workers that they can pay the least.”

Debbie Stabenow creates communal cringes on Detroit`s executive floors when she says:

“We need to stand up to the bully on the block. The bully on the block continues to take our lunch money and we need to stop that.”

Her solution seems to be to create empty pockets: Nobody can steal your lunch money, if you don’t have any.

Meanwhile, carmakers take cover and hope that the matter is over when the circus moves out of town in November.

GM’s Washington, DC, spokesman Greg Martin asks me to understand that he won’t say anything else than a prepared statement. It arrives a few minutes later by email.

“GM’s success in China, which is now the company’s largest market, illustrates the benefits of trade and good economic relations to both countries. Because China represents tremendous growth potential for American companies, we hope that both countries continue to work through their differences constructively.”

Well said. Let’s hope the prayers will find an open ear.

“It happened on January 30, the 8th day of the Chinese New Year,” the culturally clued-in Carnewschina tells us. “Because 8 is a lucky number in China, many couples will get married on that particular day.”

This traffic jam was caused in front of the Taizhou municipal government buildings in Taizhou in China’s Zhejiang Province.

In the olden days, you banged your girl, and then got married. In China, as modern as it may be, the big bang is after the wedding ceremony. No Chinese wedding is complete without WWIII – worthy fireworks. The delivery vehicles for the marriage-megatonnage are purpose-converted ‘salute cars.’ As Tycho of Carnewschina tells us, the salute cars “are mostly based on old Beijing-Jeeps, dressed in military style with a big and scary rocket launcher in the back.”

Tycho covers Chinese cars and weddings like no other. He is a certified expert: He had his own Chinese wedding, and the grapevine says that it was successful. Tycho reports that the salute cars are for hire: “Rent for one day will cost around 5000 yuan, 800 USD, including the fireworks and personnel.”

As they said: When you get married, start your new life with a bang.

David Mulroney, Canada’s ambassador to China, was mocked on a Chinese social networking site for committing a major social faux pas – according to commenters on Weibo, a Chinese social networking site, Mulroney’s Toyota Camry, his official car, lacked sufficient prestige for a man of his station.

While the Audi A6L is the standard vehicle of choice for anyone who is somebody in China, Canadian cabinet ministers are capped at a car allowance of $32,500. Most Canadian politicians opt for Canadian built cars, which leaves them with a pretty good selection of rides; the Ford Edge, Chrysler 300/Dodge Charger and Chevrolet Impala can be seen in motorcades and government building parking lots. Prime Minister Stephen Harper usually rolls around in a black Suburban, and our Governor-General (the British Monarchy’s representative in Canada, and our official head of state) gets a Canadian made Lincoln Town Car.

The Globe and Mail article goes on to explain the semiotics of Chinese and Canadian car choices. Two obvious differences; any Canadian government official that bought an expensive luxury car with taxpayer funds would be publicly crucified – in fact, it’s happening right now. Second, driving a Buick minivan in North America is anything but a status symbol, no matter how cool it is in China.

This is the new JAC 43R pickup truck. It looks “more than a little bit like the good old American Ford F150,” Carnewschina says.  Even the logo is a blue oval. The headlights look like a 3rd shift job from a producer of OEM Ford headlights. The semblance is so canny (or uncanny?) that even the Chinese interwebs are abuzz about the intellectual property infringement. You can rest assured that they have seen it all. The F150 lookalike is not even out yet, it exists only in spy photo form, and already causes a dust-up . The 43R will likely debut at the Beijing Auto Show in April, Carnewschina reckons. Ford will be there.

The F150 is not officially on sale in China, but there will be colossal likelihood of egregious confusion once the Chinese truck gets to Africa and South America. JAC and other makers of Chinese cheap pickups do brisk business there, filling the voids left by the now expensive offerings of GM, Chrysler and, yes, Ford.

With Audi offering an A4L in China, BMW naturally has to get in on the act. Now that a new, locally made 3-Series is debuting, BMW will offer a 335Li for customers who want to be driven, rather than drive the…erm…Ultimate Driving Machine.

The car will be made in collaboration with local joint venture partner Brilliance. The 335i was apparently an import in previous generation, but the 335i will be made locally. While the A4L starts at RMB272,800 (about $43,000 USD), pricing for an E90 3-Series (not the F30 pictured above) starts at RMB299,800 ($47,000 USD) all the way up to RMB626,200 ($99,000) for an imported 335i. Expect the new F30 cars to start below RMB300,000.

Before  his passing, the late North Korean leader Kim Jong-il visited China in May 2011. At these events, it is customary to exchange welcome gifts. When Kim visited the First Auto Works (FAW) in Changchun, Jilin Province. Kim received a Red Star Hongqi with a big red bow on the hood. At least if the sources of Carnewschina are correct.

As the sources are identified as a “South Korean army fan-site,” reader discretion is advised.

Of course Kim had to reciprocate, that gift was generous. A full-spec HQ3 costs 688.800 yuan in China, or $108.000 US, or so we are told.

Kim ordered 3,.000 of the above pictured 6×6, FAW’s newest army truck. And some ‘army jeeps.’ as well.  Consider everything settled.

Carnewschina opines that the choice of the a Hongqi HQ3 as a gift was a bit odd:

“The car is based on a Toyota Crown, made in China by the FAW-Toyota joint venture. Toyota for sure is a Japanse brand and North Korea hates Japan big time, even more than it hates the US and South Korea.”

Maybe, when the Dear Leader found out the truth about his gift, he had a heart attack.

The world’s largest automakers are hugely dependent on China. More than a quarter of  GM’s and Volkswagen’s global sales are coming from China. With Europe’s market predicted to be flat or negative, and with only modest growth expected for the U.S., automakers are looking to the BRIC countries for long-term growth. Currently, the growth in China has more or less stopped. Are automakers betting on the wrong horse?

At the same time, the marketing of cars in China is badly understood, sometimes even in the companies themselves. If you are interested in these matters (and you might not be), then we recommend this rather lengthy interview with Nigel Harris, Ford’s VP of China Distribution Operations.

Once you get through the requisite verbiage of how well Ford trains its dealers and mechanics, you will find interesting insights. The use of traditional media, of the internet, of social networks and even product placement is discussed. In the end, you might feel that us and China are closer than we think – at least when it comes to selling cars.

No, this is not a 1961 Rolls Royce Phantom. Fooled you. It is a ‘wedding car’ made by a Chinese company called Qingdao Soar Automobile. According to Carnewschina (which has more pictures,)

“This sort of car is mostly used for weddings and mostly in the countryside where farmers want to impress each other with their ‘Rollers’ (and later at dinner with the biggest cow on the table). City folk can hire a real Rolls Royce these days.”

Regular city folk rent Rollers. The well-to-do city folk has supercar weddings.

Ironically, the fake Roller is based on a stretched platform from the Brilliance BS6 sedan. It is powered by a Mitsubishi-sourced 2.4 four-cylinder with 136 hp – enough to drive bride and groom down main lu, while World War III worthy fireworks go off.

Why ironically? Brilliance  is the joint venture partner of BMW in China, and BMW owns Rolls-Royce.

The price of a base-spec Soar RRO (Roller Rip Off) starts at around 250.000 yuan, or 39.000 US dollar.

This is the factory. Looks busier than the Rolls-Royce factory.

Original: It’s part of the Qingdao Soar collection. They probably used it for taking measurements.

Copy: They should have measured the rims also.

Today, I present you the first pictures of the interior. This Porsche sure looks like a comfortable place to smoke a cigar, play with your second and/or third wife and to tell the driver to take it easy, or to go like stink.

Clearly a high-quality conversion. RUF for sure ain’t no in-the-shed operation. Still, I am a bit disappointed by the lack of TV-screens. This needs to be improved.

A huge center console runs all the way to the back. It just misses the gimmicks. Wine-cooler? I don’t see any. Advanced controls for the stereo? Nope. Spittoon? Neither. Without these extras, it is only a stretched Panamera and not much more.

Bad-ass.

Dutchman Tycho de Feyter runs Carnewschina.com, a blog about cars in China, from Beijing, China. He also collects die-cast models of Chinese cars.

The Buick Excelle is China’s top selling car in 2011, moving 254,000 units? Buick sold roughly 178,000 vehicles in the USA by contrast.

Coming in second was the VW Lavida, while the Chevrolet Cruze was third. GM and VW comprised 7 of the top 10 spots.

The Wuling Sunshine, a commercial van, technically outsold the Excelle, with 731,000 units sold, but doesn’t count as a passenger car in the same way that a Ford F-Series is classified separately.

Rare earth free electric motor

China is learning an interesting lesson: Only take a hostage if the other side wants it back. According to Japan’s Kyodo Newswire [sub], Toyota “has acquired technology to produce hybrid and electric vehicles without using rare earths and may begin doing so in about two years.”

In 2010, China used its rare earth as a political tool. To make a point with the Senkaku islands, China tinkered with the rare earth supply, and prices shot up. Rare earth is in the  magnets that power everything from disk drives to  hybrid and electric cars. Japan relies on China for about 90 percent of its rare earth supply, says Kyodo. Japan did not want to be blackmailed. Universities in Japan stepped-up research into dirt-free magnets. A year later, Toyota’s engineers reached an “advanced stage” of research on a new “induction”-type electric motor which holds the promise of freeing the Japanese automaker from dependence on rare-earth materials.

Toyota now seems to be close to commercialization, and it engages in its own, well, bargaining.  Says Kyoto:

“Toyota will keep using rare earths if their prices drop, but will consider putting the newly acquired technology into practical use if their value continues to surge.”

When asked by Reuters, “a Toyota spokeswoman said the company continues to research ways to reduce rare earth usage and has no time frame yet for commercialization.”

Sure. Remain unpredictable, lesson number two.

Could Saab end up in Turkish hands? According to Bloomberg, Turkish private equity firm Brightwell Holdings will bid for the remnants of Saab, with a view to producing cars again.

Brightwell board member Zamier Ahmen told Bloomberg “We will make a bid very shortly, there’s no question,” but the company is still doing its due diligence. The aim appears to be a restart of production at Saab’s Swedish facilities, and a revival of Saab’s automobile lineup. Any deal must be approved by GM, the Swedish government and the European Investment Bank. As far as Islamic countries go (well, sort of – Turkey is officially a secular country), we’d take a new 9-5 over one of the Iranian Peugeot clones, but there will no doubt be many dissenting views in the comments.

China’s first mass-produced military jeep was made by Chongqing Chang’an, a predecessor of today’s Chang’an Automotive, a joint venture partner of Suzuki, PSA, and Ford.

The Chang’an Changjiang 46 was a Chinese copy of the American Willys Jeep.

Changjiang is the brand name, it means Yangtze River, which runs through Chongqing, the hometown of Chang’an. Production of the Changjiang 46 started in 1959, and ended in 1963.

The numbers were small: 38 in 1959 rising to 1390 when production ended in 1963.

In 1963, the production of the Changjiang 46 moved to Beijing, as per the decree of the highest political powers in the capital. All factory equipment and materials were moved by river to Shanghai, then up north via sea to Tianjin, and finally by road to Beijing.

The factory was then built up all over again and became the predecessor of today’s Beijing Auto Works.

The man in the picture is Xu Guangqi, born in 1932. He was responsible for the production of the 46 and said he cried when he saw his cherished 46 tools disappear into the mist over Yangtze River, on their way to Beijing. Mr. Xu was not invited to come along…

Tech specs of this rugged beauty: Weight 1150 kg, maximum load 440 kg, it could carry six people including the driver. Power came from a 2.2 liter 4-cylinder water-cooled 4-stroke carburetted engine, good for 115 km/h top speed. Alleged fuel consumption was 13.7 liters per 100km.

Today, there aren’t many Changjiang 46′s left. One stands in a military museum in Chongqing, where Mr. Xu takes good care of it.

Dutchman Tycho de Feyter runs Carnewschina.com, a blog about cars in China, from Beijing, China. He also collects die-cast models of Chinese cars.

Chinese are snapping up Porsches at an alarming rate. Chinese took the three-monkey-approach to the tepid overall car market in 2011 and bought  65 percent more Porsches than in the year before. There is a 120 km/h (75 mph) speed limit on China’s freeways. Where can the rapidly growing crowd of Chinese Porsche drivers experience what their machine really can do?

In 2013, Porsche wants to open its own private racecourse near Shanghai, says Germany’s Frankfurter Allgemeine Zeitung. It won’t be just any old track for pseudo racers. FIA will be called to certify the track as Formula 1 material. China currently has only one Formula 1 track – also near Shanghai. Shanghai has a population of over 22 million, it can take two tracks. If I would have been Porsche however, I would have put it elsewhere.

The German newspaper thinks that the track will be similar to Porsche’s track near Leipzig, Germany. The FIA-certified track was designed by German architect and racer Hermann Tilke. He also designed the current Shanghai F1 track. Despite its certification, the Leipzig track hasn’t seen a race since 2002, notes the German paper. The track is used for testing and to impress customers who can go home, saying: “I drove that Porsche on a Formula 1 track.“

Atlanta and L.A. could get similar tracks.

2011 Porsche Sales, Major Markets

In 2010, China had passed Germany as Porsche’s second-largest  market, at that time far behind the U.S. Last year, the ranking did not change, but China started to tailgate the U.S. Nobody expects sudden growth in the U.S., Porsche and the FAZ expect China to become Porsche’s largest market this year. It’s part of the family experience: China is by far the largest market of the Volkswagen Group.

An angry owner of a Porsche Cayenne staged a massive protest at his local Porsche dealer in Shenzhen in Guangdong Province. He had bought a brand-new Cayenne two months ago for he astounding price of 2.7 million yuan, or $428,000 (at least that’s what he had told MOP.com.)

Unfortunately, the Cayenne owner experienced a lot of trouble. The owner claims that the car’s problems made him almost crash on two occasions.

He took his Cayenne back to the dealer who promised to fix it, but the problems didn’t go away. He went back again, and again, but there was still no fix. In the end, the owner could not take it anymore. He rented a flatbed and hauled his SUV right in front of the dealer, flatbed covered with banners accusing the Porsche dealer of all kinds of bad, including discrimination… He also rented a crowd.

The owner argues that this sort of thing would never happen in the US or Germany. Therefore, he says, the Porsche dealership in China “discriminates against Chinese consumers”. Discrimination is a very sensitive thing in China and still appeals to many. Chinese people easily feel ‘discriminated against’ by ‘the West’.

According to reports in Chinese media the dealer tried to solve the problem by offering the angry owner a new Cayenne in exchange for his troubled car. The owner didn’t want another Porsche, and asked his money back.

Porsche reluctantly agreed, but only if the owner would sign a confidentiality agreement stating that he wouldn’t tell anyone why he gave his Porsche back. The owner refused to sign and the deal fell through.

As for now, there seems no solution in sight…

(ED: If I would have paid $428,000 for a Cayenne, I would want my money back also.)

Dutchman Tycho de Feyter runs Carnewschina.com, a blog about cars in China, from Beijing, China. He also collects die-cast models of Chinese cars.

If I tell you that China will hit 20 million cars this year, you probably think I was drinking. I will tell you no such thing. But what if the chief of GM China says it? As a matter of fact, he just did.

“We think passenger cars will go up 10 per cent and commercial vehicles will go up 5 per cent this year. I think it will nudge 20 million.”

So said Australian ex-pat Kevin Wale to a reporter of the Sydney Morning Herald who had come all the way to the Detroit Motor Show.

If you would have asked me at this time of the year last year, I would have told you that China would go through the never-reached-before 20 million barrier in 2011. After all, 18.6 million cars in 2010 needed just a mere percent growth to be propelled through the 20 million sound barrier. Baby steps by Chinese standards. That record was toast. No sweat at all.

Then, the overall market came to what amounted to a halt. Bigger and pricier cars still sell at a hearty clip. It is the smaller cars and delivery vans that don’t move.

I am worried about that weakness in the commercial segments. It usually presages a recession.

Wale is hedging his bets a bit and warns that “we’ve never been right on a forecast yet. But the demand is still strong, the retail market is still strong and people still want to get into new cars.”

German tuner Ruf is coming to China. He did what everybody should do who is setting up shop in another land: Do thorough market research. When he asked what Chinese like, the answer was: “Long!” With that in mind, Ruf made what the Chinese market (possibly) wants: A stretched Porsche Panamera.

This thing is a full 40 centimeters (that’s a little less than a foot and a half for the metrically challenged) longer than stock. I would have called in “Max Legroom” and would have created a cartoon character. Instead, Ruf opted for “XL”.

In China, the car may have to contend with a factory-stretched Panamera. The Dutch version of Autoblog says that Porsche will combat penis envy cramped rear compartments with a Panamera that gained a mere 12 cm in length. The accompanying picture shows the subtle shapes of a dildo.

Tip o’the coolie hat to Tycho at Carnewschina, who keeps an eye on these developments. He has more pictures.

GM is casting nervous glances at its perennial antagonist in China, Volkswagen. For both, China is a strategic high ground.

• GM sells more than a quarter of its global production in China. GM sold a record 2,547,171 units in China in 2011, which is more than the 2,503,797 units sold in the U.S.  last year.
• Volkswagen also sells more than a quarter of its global production in China. Volkswagen sold a record 2.26 million units in China in 2011, which is twice the numbers of cars the Volkswagen Group sold back home in Germany.

“So?” I hear you say. “Both are doing great. What’s to worry?” Where shall I begin?

GM’s problem in China is that more than half of its Chinese sales are Wulings. They are made by a three-way joint venture in which GM holds a minority interest. They are cheap. A few thousand bucks buy you a Wuling Sunshine. Profits in this segment are razor-thin to non-existent. If GM currently gets much more than the bragging rights out of that deal, I will be amazed. The biggest problem: This segment is under pressure.

Without Wuling, GM’s Chinese achievements would stand in a better light. Shanghai GM sold 1.23 million cars in 2011, up 18.5 percent from a year earlier, an impressive feat, given the fact that the Chinese market “grew” by only 2.45 percent last year. However, without Wuling, GM China would be compared with Nissan. With Wuling being part of the total, GM China grew only by 8.3 percent in 2011.

Volkswagen’s performance in China is far better than the wulingfied GM China. Volkswagen’s Chinese sales grew 17.7 percent in 2011.

Both GM and Volkswagen are grabbing market share from other players. However, in the world’s largest car market, Volkswagen is grabbing market share twice as fast as GM. GM’s sales in China look high, but more than half of the volume comes from a low-cost, low-margin segment that is contracting.

Automobile output grew even slower, and that barely: Production is up 0.84 percent from a year earlier to 18.42 million units in 2011.

Still, China is and remains the world’s largest car market and car producing country.

14.47 million passenger cars were sold in China last year, up 5.19 percent. Sales of commercial vehicles are down by 6.31 percent year-on-year, production  is down 9.94 percent.

The only segments that are up are SUVs, up 20.19 percent MPV, up 11.74 percent.

Throughout the year, we had been watching the normally boring commercial segment with growing concern. Normally, declining sales of commercial vehicles are seen as an indicator of a deteriorating economy. Commercial vehicles are a 4 million market in China