GM Plans Push for Chevy in China -- WSJ
April 20 2017 - 3:02AM
Dow Jones News
By Mike Colias
SHANGHAI -- Chevrolet, General Motors Co.'s biggest brand, is
counting on a spate of vehicle rollouts in coming years to end a
sales skid in China.
GM's other brands have been on a tear in the world's largest car
market, including Buick, which topped 1 million vehicle sales in
China last year to rise to second place behind Volkswagen AG's
namesake brand. However, Chevy's sales have declined for two
consecutive years, a slump executives blame on a vehicle lineup
thin on sport-utility vehicles, whose popularity is surging in
China.
Until recently, GM had been using older, "legacy" vehicles to
fill out much of Chevy's lineup, said Alan Batey, head of the brand
globally, referring to what is a common tactic for auto makers to
sustain profit margins in emerging markets. He said Chevy was
gradually replacing those with the same vehicles it sells in the
U.S., which are more refined and have better technology.
"Over the next two or three years, we've got a whole arsenal of
products, " Mr. Batey said in an interview on the sidelines of the
Shanghai auto show Wednesday. "We're really just getting started
now."
The largest U.S. auto maker by sales plans to introduce 20 new
or revamped models in China by 2020, including the Equinox, a
compact SUV that GM is rolling out in the country for the first
time. It has long been one of the auto maker's top sellers in the
U.S.
GM's China business generated about $2 billion in equity income
from its joint-venture partnerships last year, about 16% of its
total pretax profit. In addition to Buick, brands sold under GM's
joint ventures in China have performed strongly, including Baojun,
a lower-priced marque that the car maker owns along with Shanghai's
SAIC Motor Corp. that has sold well in smaller cities and rural
areas.
Chevy's rough patch comes as local Chinese brands churn out
increasingly refined and competitively priced vehicles, in some
cases challenging mainstream foreign brands including Hyundai, Ford
and Chevy.
A few years ago, GM executives frequently emphasized the need to
increase Chevy's sales globally, with a special focus on China. In
2012, Chevy signed a roughly $600 million, long-term deal with the
U.K.'s Manchester United soccer club, citing the team's large
following in China.
While Chevy remains GM's largest brand by sales volume --
accounting for 37% of its 10 million vehicle sales world-wide last
year -- its performance in China has been overshadowed by Buick's
gains in the past few years. Buick's sales in China have risen 46%
since 2013; Chevy's slid 16% over that period to about 525,000,
less than half of Buick's tally.
Yale Zhang, a Shanghai-based analyst at Auto Foresight, said
Chinese consumers increasingly were turning to domestic brands for
SUVs, citing huge increases in sales by some of China's biggest
domestic auto makers, including Great Wall Motor Co. and SAIC.
Mr. Zhang said Chevy was well-positioned to capitalize on the
SUV trend with the Equinox, which has the design and features be a
formidable player in a vehicle segment that is among China's
largest.
"That one model has the potential to turn around Chevrolet's
performance here," he said.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
April 20, 2017 02:47 ET (06:47 GMT)
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