By on January 14, 2010

Why is this man smiling? Kevin Wale. Picture courtesy

Kevin Wale, president of GM China, is convinced that China has passed the U.S. for good as the world’s largest auto sales market. He expects China’s growth to continue, creating a gap that will be too large for the U.S. to close, says AP.

As reported ad nauseam, vehicle sales in China last year rose 46.2 percent to 13.64m units. For this year, cautious industry association projections expect somewhere between 15m and 16m units to change hands.

Wale thinks Chinese auto sales will be anywhere between 14.5m to 15.5m by the end of this year. For the U.S., analysts predict 11.5m to 12m.

Very optimistic analysts reckon the two countries could be trading places until 2015 when China firmly takes the lead. Wale isn’t one of them.  He doesn’t think the U.S. will ever regain the lead.

This time, TTAC agrees with Wale. “China will grow again next year, which means that the U.S. has to pick up five million in two years to stay in the race,” Wale said. “Got your chips?”

And then there’s the perception gap, China style:

Many U.S. buyers have negative impressions of GM brands because of quality problems “of the past,” or because the company was in bankruptcy protection and had to take U.S. government aid to survive.

In China, GM brands, especially Buick, are well received among China’s growing middle class and younger population. Interesting data point: The average age of a Buick buyer in the U.S. is 66, Wale said, but it’s half of that in China.

Kevin Wale has reason to be boisterous. Whereas GM has, well, fiscal problems, GM is solidly profitable in China, Wale said, without giving specifics. Here is some indication: Joint venture partner SAIC, who not only has GM, but also VW under its belt, announced a few days ago that its net profit rose more than nine times compared to 2008. Which would amount to $900m or so this year. SAIC sold 2.72m units this year. Of that, around 800K GMs. Back of the envelope: If GM realized $150m in profits in China, then they’ve been doing really well.

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17 Comments on “GM Says Uncle: US Will Never Catch Up With China Again...”

  • avatar

    I just hope that this “green movement”  was part of a numerous strategic positioning moves by the US to ensure we have a stake in India and China’s growth into consumerism.

    Perhaps that’s what the Iraq takeover was really about –  holding a strategic base and strategic petrol reserve.

    Its obvious China and India were gonna surpass America because our corporations have sent all our best jobs over there and have completely bet against the American education system and our own people.

  • avatar
    Cammy Corrigan

    I don’t think the Chinese will be buying Buicks in as big a number as they are now, in about 5 years from now. With German, JLR and Japanese luxury makes trying to make inroads in China and throwing a lot of resources to make it happen, it’s only a matter of time before Buicks fall by the wayside.
    In the 19th century, the smart money went to the UK, in the 20th century, the smart money went to the United States, in the 21st century, the smart money goes to China. China will be dominant in many things to come.

  • avatar

    China has a lot more people than the US, even North America as a whole. So it is natural that they should buy more cars than us if they have the means.  Will automakers abandon the US market as a result?  I doubt it.  Will the Chinese build plants here to make cars? Definitely.

    • 0 avatar

      I doubt it. There’s no incentive to bring capital spending here.

    • 0 avatar

      “Will the Chinese build plants here to make cars? Definitely.”

      I seriously doubt it. By coupling the Yuan to the US Dollar again, the Chinese made it clear that they intend to keep their status as the world’s workbench.

    • 0 avatar

      I think they would have to build plants in NA.  Unlike electronics and clothing, when it comes to cars, people seem to care a great deal as to where they are assembled.  Parts will of course be manufactured in China for low cost.

  • avatar

    After the commodity price wars begin again, the sales growth rate in China will slow, but global commodity demand-driven inflation coupled with still high personal debt levels crossed with dollar-devaluation driven inflation will will slow or reduce sales in the US for quite a while … so the gap between China and the US, in absolute sales terms, should widen.

  • avatar

    So the average age of a US Buick buyer is 66, and a Buick buyer in China is about 33?  Maybe it’s because there are Chinese Buick models that are easily twice as attractive as the US ones.

  • avatar

    I don’t see why the US has to lead the world in auto sales.  The US market is saturated; the Chinese market is just starting to take off.

    • 0 avatar

      EXACTLY! Who cares? Let’s stop turning our cars over like kleenex (guilty!) and start demanding cars we WANT.
      Diesel? Yes.  Manual? Yes.  Petrol & Auto? Sure, if you like . . .  I couldn’t get over the cost of cars in eastern Europe (was talking to a co-worker out there)  . . . but if you get the car you want and hold onto it longer, isn’t that, you know, sorta GOOD?

  • avatar
    Christy Garwood

    “Kevin Wale, president of the GM China..” and “This time TTAC agrees with Wale.”
    If this isn’t a banner day on TTAC, I don’t know what is! 
    Yes, I work for GM in North America.

  • avatar

    The western countries are going to have to face the fact that they are developed economies, and at some point there is a limit to growth.  This doesn’t mean the end of the economy or anything, just as the decline in manufacturing jobs in the US didn’t mean a decline in actual manufacturing (we are either the world’s leading manufacturer or second to China, I think we’re still on top). 

    When everyone has 2 cars that last for a decade each, will they continue to buy cars at a very high rate?  Not compared to a place where people are getting richer and don’t have cars yet.  Plenty of cars will always be sold in America (I don’t see us building viable public transport across the country any time soon), some people will trade up, lots of people will still need new cars, and we do have a decent number of young people getting first cars…  But we aren’t China, we don’t have a billion+ population, and we already have 2 cars in every driveway.  Plus we are in the middle of a sort of economic reckoning and/or Japan style end to endless growth.

    It doesn’t take a seer to point out the obvious.  Or perhaps it does; perhaps that’s what makes them a seer, they see the obvious.  In any case, this is obvious to anyone who has been paying attention.

  • avatar

    I think what this really means is we are going to start seeing fewer and fewer US only vehicles from all manufactures.  We might be the number 2 market now, but eventually will probably be 3 with India (unless we have some sort of population explosion which isn’t likely).  Less performance and less large vehicles are on the way.

  • avatar

    This guy is a genius!  China a bigger market than the US?  China will dominate the 2000’s in the same way the US dominated the 1900s?  Really?
    Sorry about the sarcasm; this just seems completely obvious.  China is going to raise the bar on production and implementation in all categories.  This is just the very beginning.

  • avatar

    And a sad day that will be. When China rules the world. FWIW Brazil is much more akin to the US than China culturally. So a US dominated world feels “natural”, but a China one will surely feel foreign.

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