GM's Strong Showing In China Indicates March Surprise
It’s that time of the month again: In the first days of the month, market observers in China eagerly await the GM China sales number. GM usually is first to report. What’s more, GM is the canary in the ( ooops) Chinese coal mine, a very good indicator for the overall market. Looking back at March, that canary happily tweets that GM’s March sales in China, including Wuling vans, accelerated 68 percent to 230,048 units. Shanghai GM’s sales of Buicks, Chevys, and a few Cadillacs rose 89 percent annually to 86,967 units. That according to Associated Press. This is another record Middle Kingdom month for GM, the 15th in a row, and it indicates a March surprise for the Chinese market.
The trend is underpinned by the good showing of Ford in China. According to a report in Straits Times, Ford’s sales in China rose 75 percent in the first quarter of 2010, while its Changan Ford Mazda joint venture saw its sales rise by 89 percent in the same period.
If the China GM oracle works as advertised (it usually is ahead of the market by a few points,) growth of overall March sales in China could be in the 50 to 60 percent league.
That would be significantly higher that the 30-40 percent rise expected by analysts polled by Reuters. But what do they know. In China, their guess is as good as mine. Until the GM number comes out, that is. Strong growth in March would be momentous, as we are comparing with a high base in March 2009, when Chinese sales begun to skyrocket.
In the meantime, The Nikkei [sub] reports that Toyota’s sales in China are up 33 percent in March. Impressive as this may sound, if our canary is not mistweeting its tune, then Toyota will again solidly underperform the exploding Chinese market. Just like it did in February, when Toyota’s sales rose 30 percent while the overall market climbed 46 percent. Toyota outperformed the word’s second biggest market, but it clearly must get its act together in the world’s biggest and most dynamic market.
Official numbers for the Chinese market are expected in a week or so.
The adroit investor can turn advance knowledge like this into big earnings, well worth the subscription price of TTAC. Access to TTAC remains free, so you get what you pay for.
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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Volume schmolume. What's the margin like? Is it enough to prop up the incentive plan here in the States? How many units do they have to sell in China to cover the $3000+ per unit sales incentive here in the U.S?
Having success in the command and control economy of China will allow GM to bring that kind of thinking back to the US. GM and overseeing government industrial planners can then chart the next great and glorious 5 year plan.