By on February 12, 2019

General Motors Renaissance Center

Last month, General Motors announced a plan to introduce more than 20 new and refreshed models in China in 2019 to “maintain its growth momentum in the world’s largest vehicle market” and pump EVs into what is probably the most electric-friendly region on the planet.

GM appears to love China and not without good reason. As the automaker’s largest retail sales market since 2012, GM hasn’t been afraid to fully embrace it — at the expensive of looking like it’s playing favorites and putting its homeland in the doghouse. But is that what’s really happening, or does it just feel that way when an iconic American company starts playing patty cake with a foreign entity?  

With 2018 in the rearview, we can take a look at how GM faired in China last year. Cadillac sold 200,000 vehicles for the first time, Chevrolet delivered nearly 530,000 vehicles, and Buick managed to move over 1 million autos for the third year running. By comparison, Cadillac sold 154,702 vehicles in the United States while Chevrolet moved a whopping 2,036,023 units. Buick sold 206,863.

It would appear that America holds a distinct advantage in terms of overall volume, but this isn’t the case. Don’t forget that the company also sells under the Baojun, Wuling, and Jiefang marques — thanks to its many Chinese partnerships. While the total sum of GM brand sales fell further (9.9 percent) year-over-year in The People’s Republic, China still delivered 3.6 million units to the United States’ 2.9 million. The Chinese decline can be attributed to a softening economy, but the U.S. situation stems from an auto market passing its peak. General Motors still sees China as having growth potential and has prioritized accordingly.

“China’s vehicle market has entered a new era of high-quality development, in which product and service excellence will be the key to sustained growth,” Matt Tsien, GM executive vice president and president of GM China, explained during last month’s preliminary product announcement. “GM will continue to optimize our product mix, backed by our industry-leading technologies and adjacent services, and explore more opportunities in electrification and autonomous driving.”

GM expects to exceed its five-year initiative to launch 60 “new or refreshed products” between 2016 and 2020, including 10 new-energy vehicles (NEVs). From 2021 through 2023, the company plans to “maintain momentum” by doubling the number of NEVs it sells.

This is another reason GM seems to, for lack of a better term, prefer China. EV acceptance is much greater there than in the United States. Even as Chinese auto sales started to backslide late last year, plug-in growth remained steady within the Eastern nation. It also has largest collection of electric vehicles, with over 2 million domestically built passenger plug-in models already on the road. Considering that the automaker appears to be in the early stages of transforming itself into a mobility/tech company, it makes sense to drive that much harder in the more-receptive East.

However, this isn’t a phenomenon that’s unique to General Motors. Most automakers are desperate to get into China; GM just showed up earlier and performed better than many of its rivals. Ford continues to get clobbered in the region. But it didn’t make China a priority until long after GM had already brokered multiple deals with local manufacturers and set up factories to support domestic sales. One company put in the time, the other didn’t.

Back at home, GM has said it intends to close down five of its facilities across the United States and lay off (or retire) a significant portion of its American workforce. While some of these efforts are clearly aimed at softening the probable economic downturn predicted by analysts, GM also wants to free up capital in order to increase spending on the development of electric vehicles, autonomous cars, and high-margin crossovers.

This probably wouldn’t sting so bad were there any evidence that the United States is interested in pursuing global trends. The country boasts a long history of having distinct automotive tastes and likely doesn’t want to lose jobs because the rest of the world is more willing to buy EVs. But, with the global markets dictating the majority of future trends, any grievances the U.S. might have will likely fall on deaf ears. Businesses respond to money and most automakers understand that China has deep pockets. General Motors certainly does and it’s making good money because of it.

In the short-term, all of GM’s decisions regarding China seem fairly prudent. However, GM’s profit margins for the region are much slimmer than they are here in the United States. In North America, people splurge on mass-produced pickup trucks. In Asia, GM has to share the wealth with its local partners — many of which are the primary shareholders of their joint venture. Undoubtedly, some will claim it was worth it so the automaker could get early access to the market, but the fact remains that General Motors still makes the bulk of its money on home turf.

[Image: General Motors]

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44 Comments on “East vs. West: Why General Motors Is Obsessed With China...”


  • avatar
    SCE to AUX

    GM’s US market share is in the 17% range. Gaining another point in the US market costs much more than it does to gain a point in China, and the Chinese volume for that point will always be greater.

    GM’s margins may be slimmer in China, but they’re probably banking on huge volumes in the future.

    IMO, Buick’s 5:1 sales ratio in China vs US tells the tale. Buick could disappear from US showrooms and it really wouldn’t matter.

    • 0 avatar

      you’re wrong sorry. Return to Greatness would bring GM points of share and decrease costs.

      • 0 avatar
        el scotto

        Mr. Buickman,
        I have a serious question. Will GM dealers work on vehicles that have over 100,000 miles or that over 10 years old? Not being snarky, I can remember when they wouldn’t. Then again, I had to wait for my Honda Prelude back in the mid-80s.

        • 0 avatar

          yes, most every day.

        • 0 avatar
          RHD

          They are curious to see a GM product that actually lasts that long.
          .
          .
          .
          That one was too easy, sorry about that. Admittedly, some GM products actually do pass 100K.

        • 0 avatar
          redgolf

          “will GM dealers work on vehicles that have over 100,000 miles or that are over 10 years old”? this is a non snarky answer – I took my 1997 Pontiac Grand Prix (178k miles) into our local GM/Buick/Cadillac dealer for a recall on a head gasket last year, they not only fixed it but didn’t try to nickel/dime me on replacing other parts that you would assume a 20+ car would need!besides I wouldn’t go to a stealership to get a car worked on that was no longer under warranity.

          • 0 avatar
            gtem

            Was it a headgasket or the leaking valve cover gasket that (potentially) leaks oil that ignites on the exhaust manifold? I guess they might have more gasket-related recalls than I’m aware of! Never mind the leaking intake manifold gasket fiasco!

          • 0 avatar
            redgolf

            oops, that’s right, leaking valve cover gasket, meant to say!

  • avatar
    el scotto

    Firing up the search light to project the interlocking D & W against the night time clouds.

  • avatar

    I always thought the “Chinese market” thing was an urban myth. Years ago, they used to say “If we could sell ONE pair of shoes to every Chinaman” (pardon the casual racism) we’d be rich. This is right up there with “we lose a little on each one but make it up in volume”.

    GM putting it all on China assumes they know that market cold. The success of MB, BMW, Toyota is that they know the market THEY ARE IN perfectly. Bringing what sells at home to the other market might get a novelty (think Harley-Davidson in Europe) but doesn’t really sell to market. Best domestic example is how bad Acura sucks….they know what sells here so we (enthusiasts) don’t get the good stuff….

    GM can barely figure out the US market. I don’t hold hope for the Middle Kingdom.

    • 0 avatar
      highdesertcat

      I think that GM is doing the right thing betting their future on China. GM has pretty much maxed out in North America.

      Now, in North America GM is placing their bets on trucks and SUVs, like the other automakers, because there is now an insatiable demand for those vehicles in the North American market. GM’s 2019 Bison is sold out for the year!

      But with new-vehicle pricing trending higher every year, and the increasing number of borrowers in default or delinquent paying their car loans, the carmakers are pushing an ever increasing number of potential buyers OUT of the demographic they are trying to sell to in the US.

      In order to stay alive GM has to win over China buyers.

  • avatar
    Jeff S

    I believe GM should make Cadillac and Buick Chinese exclusive brands. As Buick’s product lines shrink to 2 or 3 models and Cadillac spends more money in an attempt to rebrand themselves it is wasted. GM needs to improve Chevrolet to make it a more competitive brand and definitely needs to do something about the new Silverado.

  • avatar
    Jeff S

    @el scotto–I recently had my 99 S-10’s and 2008 Isuzu I-370’s oil changed at a nearby Buick GMC dealer and the S-10 has 119k miles so the answer is yes. That dealer even sent me more service coupons to use on my trucks. The service department was pretty good.

    • 0 avatar
      highdesertcat

      Jeff S, my BFF’s ’93 S-10 has finally reached its last throes of agony. There’s truth in that old saying, “Chevies run badly longer than most brands run at all.”

      He told me that he had the weirdest things happen yesterday on his way home. Without any warning, his Digital instrument panel blinked, and the truck downshifted into “limp home mode”, running sluggish in what appears to be second gear. Reverse gear worked fine. Engine runs fine. None of the warning lights (Chk Engine, ParkBrk, Seatbelt) work.

      He can still use it as long as he doesn’t need to go faster than 25mph. Imagine that, a truck with ONE speed forward.

      He once told me that he had so much time and money tied up in that little truck to keep it running, to the point where he could not afford to let it go.

      I laughingly told him, “The time has come for you to let it go.”

      To which he replied, “Yeah, it’s time, but what the hell am I going to buy now? I’m 71 years old!”

      I’m hoping to convince him to buy a Tacoma or Tundra.

      • 0 avatar
        redgolf

        Uber!or get a cheap lease!

      • 0 avatar
        CaddyDaddy

        It’s the Throttle Position Sensor on the throttle body. A cheap $20 fix.

        • 0 avatar
          gtem

          Yeah I was going to say, that might sound scary, but the culprit is likely something minor. The intake boot (cheap aftermarket junk installed by the PO) popped off my A4 driving home from the grocery store a few months ago, leaving the MAF sensor reading nothing and the intake just sucking in air, unmetered. The car started bucking and stalling, running like crap, CEL on, I limped home and laughed at how silly and trivial it all was.

      • 0 avatar
        highdesertcat

        Thanks guys, very helpful.

        I just got back from his house (after we took his dying S-10 to Pizza Hut where he treated me to lunch), and here is what we found:

        Engine starts fine, runs good, responds normally to throttle.

        Transmission can manually start in 1st gear and will upshift to 2nd.

        If put in D, it will go but without any shifting up or down.

        We drove it at 50mph with the tach reading 2750rpm. Way high!

        It appears no Overdrive and no 3rd gear.

        Transmission fluid is clean Red.

        No cure planned though. No more money for this truck. After 27 years he is going to part with it. Maybe I can nudge him toward a Tundra, ’cause he’s a good guy! And then there is that magnificent Tundra V8.

        In the mean time, he’ll be using the S-10 for short runs and grocery-getting in town.

        Beats walking. His wife and grand kids are using his other vehicles.

  • avatar

    One prominent Chinese apparatchik said: “What is good for General Motors is good for China and vice versa”.

  • avatar
    Spartan

    GM’s marketshare will continue to dwindle in the US because the population at large won’t ever forgive them for the 70s or the 2009 bankruptcy, and that’s a damn shame. Americans tend to hold grudges and NEVER forgive anything. For some reason, it’s seems to be a cultural thing. We will hang something over someone’s head forever.

    “Yeah you’re clean now and I’m so proud of you. But remember when you were an addict selling all of your stuff! Man you’ve sure cleaned up. But don’t forget you were once a meth head!”

    I’ve lived outside the US more than in over the past 10 years. I lived in a country that produced cars and domestic cars were clearly the preferred vehicles of choice. I saw some American cars, but mostly domestic cars. I won’t name the country because it is irrelevant in this context.

    It amazes me that people will go out of their way to buy an appliance car from a foreign automaker when we have domestic cars that would serve the same purpose. I’ve purchased GM products over the years. I own a GM product now. I’m very happy with it. It was made here by an American company and that means something to me. That sense of pride doesn’t seem to exist anymore. Out of the contributors here, how many have purchased a new American car in the last 10 years? How many commenters can say the same?

    I think once we get after some of these issues that are dividing our country, find some common ground and stop stereotyping each other, we could gain a sense of pride about being American and have healthy patriotism and healthy protectionism. But, we won’t. And we won’t fully understand the error of our ways until GM and Ford have completely packed up and all that remains is white collar management in Detroit.

    Then we’ll call them traitors, because that’s what we do, when in reality we should find a mirror.

    • 0 avatar
      ajla

      I didn’t quit GM, GM quit me.

    • 0 avatar
      highdesertcat

      Spartan, that’s quite a dissertation.

      Maybe Americans who have left the domestic GM and Ford folds choose to drive those “cars from that country where you lived where their domestic cars were clearly the preferred vehicles of choice.”

      Americans are supposed to be the most forgiving people on the planet. All a sinner has to do is say that they’re sorry and they’re forgiven.

      Maybe it’s about “more and better value for your money” when Americans choose to “buy an appliance car from a foreign automaker when we have domestic cars that would serve the same purpose.”

    • 0 avatar
      SCE to AUX

      “Americans tend to hold grudges and NEVER forgive anything. For some reason, it’s seems to be a cultural thing. We will hang something over someone’s head forever.”

      I think you’re wrong on that. Americans were buying VWs 4 years after WWII, and couldn’t get enough products from Japan shortly afterward. Vietnam (still communist) has become a tourist attraction for Americans. And that thing with England is a quaint memory from history books.

      We’ve elected many previously-tainted politicians over the years (Kennedys, Clintons, Bush 2, and Trump come to mind). And many ex-cons go on to live productive lives in the US, as they should.

      Perhaps what burns Americans the most is a bad financial deal, and people sometimes spend more on cars than their housing. If you’ve been burned by a particular brand, it’s pretty hard to go back.

      • 0 avatar
        highdesertcat

        ” If you’ve been burned by a particular brand, it’s pretty hard to go back.”

        Amen.

      • 0 avatar
        sportyaccordy

        Well put SCE to AUX. GM has spent much of the last 50 years pissing away brand equity and customer satisfaction. It’s silly to think that reputation will disappear overnight.

        Not to mention plenty of “foreign” manufacturers build cars here. We as Americans need to stop rewarding mediocrity and incompetence. The domestics got comfortable in the void of competition after WW2, got spanked in the mid 70s and have never fully recovered.

    • 0 avatar
      200k-min

      “It amazes me that people will go out of their way to buy an appliance car from a foreign automaker when we have domestic cars that would serve the same purpose.”

      In the USA an “appliance” car is the F150. The Camry or Accord have never EVER touched the sales of the F-series. Isn’t the Grand Cherokee and Explorer both “American” vehicles? You can’t swing a dead cat in the USA without hitting one of those vehicles, including in coastal bastions of imports. Hmm.

      Americans do buy American vehicles. I have a Fusion that was bought in the past 5 years. It was screwed together in Mexico but I think most people would call it American. Opinions may differ but at the time of purchase I’d say it was far better than the Camcord appliances…at least for what I wanted. From the rental Camrys and Accords (YES ACCORDS on rental lots) they aren’t any better even in 2019 trim.

      So, Americans do buy American vehicles. I didn’t highlight any GM products because outside of large trucks and SUV’s they’ve abandoned this market for Asian dreams. That’s their prerogative but the last line of the article sums it up pretty succinctly. For all that volume China isn’t repatriating anything worth a damn. Good for you GM.

      • 0 avatar
        johnds

        I am picking up on 2 different personalities. 1 is Grandpa Simpson from the Simpsons, and this old co worker of mine that hated Hondas so much he had a 2007 Accord as a loaner and said it he was a terrible car compared to his 2007 Dodge Avenger. I scratched my head and couldn’t understand because the Accord was put together very well, and the Dodge was was very cheap. I think he was comparing a low trim level Accord to a fully loaded Avenger with a V6. He liked shiny things and a V6. Had he compared Apples to Apples he would have found the Honda was the superior vehicle. Just like if you compared a 2.0T Accord Touring to the Fusion you have, you would find your car is inferior.

    • 0 avatar
      Trucky McTruckface

      “It was made here by an American company and that means something to me. That sense of pride doesn’t seem to exist anymore. Out of the contributors here, how many have purchased a new American car in the last 10 years? How many commenters can say the same?”

      I’ve purchased two, and I’d likely purchase another. But that sense of pride is gone because Detroit squandered it with a long legacy of substandard products and complete indifference to the consumer. Most of those foreign-branded appliance cars are now made here by Americans, so why the hell would anyone go back after getting burned in the past? Because of an ever-dwindling number of jobs thanks to offshoring? Because it exists legally as a U.S. entity?

      GM doesn’t give a sh*t about you. They’re putting all their resources into chasing a quick buck in China because that’s easier than trying to sell you a better product at enough of a profit to keep your neighbor employed. And if they thought emptying out the RenCen and relocating the headquarters to Shanghai would goose the stock price up, they’d do it tomorrow.

      • 0 avatar
        redgolf

        all new – 69 Camaro, 94 Saturn Wagon, 95 GMC Sonoma, 96 GMC Sonoma, 97 Pontiac Grand Prix, 98 GMC Sonoma, 03 Chevy Silverado, 14 Chevy Cruze (lease) 16 Buick Encore (lease, I know made in Korean, the wife needed a car) NO major issues with any of them all minor issues were covered under warranty except the Saturn trans went out shortly after buying it, they allowed me to order a new Saturn to replace it even after they fixed it, what a deal! all used – 55 Buick Century, 63 Pontiac Catalina, 68 Buick Skylark, 72 Buick Skylark Custom, 72 Buick Limited (225) Ford van that lasted through the 80’s early 90’s the only time I got “burned” was on a used one owner 95 Toyota Camry bought for my son, the transmission went out on it, twice!

        • 0 avatar

          how did you like those Buicks?

          • 0 avatar
            redgolf

            Loved every one! Especially the family 72 Limited with the 455, blue with black vinyl top, I’ll never forget I was selling a tv, two black women came over to buy it, when one of them spotted the Buick in the driveway she said ” that’s a fine looking deuce ya got there”! (225 aka deuce and a quarter) ;-) bought it used with 27k miles on it for $3500 drove it for 8 years no issues except a clogged gas tank filter (easy fix) sold it with 99k miles for $1500 still looked “fine”!

          • 0 avatar

            thanks for sharing. you brought a smile to this old Buickman. I bought a ’65 Deuce in Blue out of VA for $650 in ’82 and drove to Flint from NY to get in the biz. didn’t know anyone. ($150 in my pocket, what was I thinking?) it got me across Canada, still here 37 years later! Buick is the Buy.

            Buickman
            Founder
            GeneralWatch.com

    • 0 avatar
      RHD

      Lots of Fords and GM products are manufactured in Mexico, Canada, China, Korea, et cetera. Check the domestic content label on your purchase documents. Your domestic car might be Made in the USA, and it might not be.
      For what it’s worth, my Ohio-built Honda was very well built and extremely dependable… until an unlicensed driver in a minivan rear-ended it.

  • avatar
    Whatnext

    GM has entered a new era of high quality development in China? When will they bring this exciting new concept to North America?

    • 0 avatar
      Asdf

      Don’t forget this is China we’re talking about. What passes for “high quality” in China is “barely acceptable” in the rest of the world. But GM and China both specialize in manufacturing crap, so no wonder GM is such a success in China. That and the fact that GM is a Chinese automaker in the making, it’s pretty obvious that GM will be sold to the Chinese in the near future.

      • 0 avatar
        highdesertcat

        ” it’s pretty obvious that GM will be sold to the Chinese in the near future.”

        I hope it’s sooner, rather than later.

        Long overdue. Shoulda, coulda happened in 2009.

  • avatar
    conundrum

    GM China sales fell off a cliff in last quarter 2018. 25% off the same quarter 2017. And so far as the usual bad business page writing goes, it seems they only made $200 million profit in the quarter. But maybe they meant loss – those people are no more literate than this article with its misspellings, poor English and lack of copy edit. What we do know is that most foreign automakers suffered the same kind of fate, and JLR lost $4 billion.

    Does GM truly know the Chinese market? Who knows? I wouldn’t give much credence to the average business rag/website to even have a proper clue how to analyze the market there – it’s slapdash stuff in the main, produced on the cheap to fill quotas each day – fresh-faced cub reporters without much clue and employed simply because they’re cheap to hire. Would any sensible US manufacturing outfit pin their hopes and lash their flag to the mast of the foreign country? Not if they had any sense, in my view.

    GM know how to stiff the folks back home with vehicles containing cheaply-produced Chinese parts, and making pickup trucks in Mexico, where the locals don’t have the money to buy what they make, violating Henry Ford’s basic rule. But like corporate entities everywhere, they just want to shave every penny off production cost, and any loyalty to the home country was abandoned decades ago in order to maximize bucks for shareholders like pension and hedge funds.

    So far as Chinese production goes, GM seems to count every vehicle they and their partners make. Makes you wonder if their partners do the same thing – so what is the actual production if both partners in these 50/50 JVs claim the same number? Does Wuling claim the same sales numbers as GM, for example? Nothing would surprise me.

    If this article fulfilled its headline and answered why GM is obsessed with China, I couldn’t find the reasoned analysis pertaining to it. If GM is going to introduce over 20 new models there this year, one hopes for their sake they have absorbed the message of recent plunging sales in the market, and truly know what the near future is likely to bring. I haven’t seen much sign that Barra and company are that bright that I’d bet on them. There’s no reason to believe GM are smarter than the managements of competing companies unless somehow the individuals at the top of the RenCen all inherited some special genetic trait denied the rest of the human race.

  • avatar
    GM JUNK

    The slow methodical march to death. Should have happened 10 years ago. Good riddance!

  • avatar
    ToolGuy

    GM and Ford are *global* companies and have been for a long time. They have global headquarters in the U.S., but they are not “U.S.” companies (by the way, referring to anything “U.S.” as “American” when speaking in a global context never quite sits right with our neighbors in Central America and South America).

    Peter DeLorenzo (“The Autoextremist”) and I had this discussion via email in the early 2000’s, to the point where he decided to end the conversation.

    Automakers were some of the first companies to become truly global – some other industries have followed. The auto companies have been global for much longer than many of us like to realize.

    (It is interesting to me that the current president of the U.S. also seems to have this view that GM and Ford are “U.S.” companies.)

    Bonus assignment: Become an executive officer of GM. Tell your Board of Directors that you do not completely buy into their vision for operations in China. Now look for a new job. This has been true since at least the 1980’s.

  • avatar
    Tstag

    I wonder what makes the European car market so different to the Chinese and US car market? I get that in some European countries volume car makers like Opel are being squeezed out by premium car makers like BMW. But in the volume space I guess the competition is fierce from the likes of Peugeot, VW group, Nissan, etc. That being the case Is Europe a lesson for GMs future in China and the US?


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