GM General Motors Company

General Motors Co. posted its biggest ever sales decline in China last year and warned of another tough year ahead, underscoring the challenges that U.S. car makers are facing as the world's largest auto market suffers its first protracted decline in nearly three decades.

GM said Tuesday that it sold more than 3.09 million vehicles last year in China, its biggest overseas market, roughly a 15% drop from 2018. It was the second straight year of falling sales in China. In 2018, sales slumped by about 10%--its first ever decline.

And the Detroit company doesn't expect things to improve quickly. "We expect the market downturn to continue in 2020, and anticipate ongoing headwinds in our China business," Matt Tsien, an executive vice president who heads the auto maker's business in China, said in a statement. GM is focused on cost-cutting and improving its product lineup, he said.

China's overall auto market, once a reliable source of growth for global auto makers, started contracting in July 2018 and has since become a trouble spot for many companies.

While many foreign and domestic auto makers have struggled as China's economy slows and auto subsidies expire, U.S. companies, including GM and rival Ford Motor Co., have fared particularly poorly.

Through the first 11 months of 2019, the combined market share for American companies shrank by 1.5 percentage points, while those of German and Japanese car makers grew, according to data from the state-backed China Association of Automobile Manufacturers. Full-year data is expected Jan. 13.

GM, the second-largest foreign brand in China by sales in 2018, has now suffered six straight quarters of sales declines there in year-over-year terms.

Meanwhile for Ford, its sales in China for the third quarter of 2019 tumbled 30.3%. After its disappointing third-quarter earnings report, Ford cut its full-year profit outlook for 2019, citing higher warranty costs, bigger discounts and weaker-than-expected performance in China. The Dearborn, Mich., auto maker is set to release its 2019 full-year results for China in the coming days.

GM's troubles in China add to growing headaches back home. In 2019, it sold nearly 2.9 million vehicles in the U.S., a 2.3% decline compared with 2018.

In late October, GM executives blamed this year's sales downturn in China on weak demand for GM's older outgoing models and overall market volatility. In China, GM has a joint venture with the country's largest car maker SAIC Motor Corp, with which it manufactures Buick, Chevrolet and Cadillac passenger vehicles.

Chief Executive Mary Barra told analysts that the company is introducing new vehicles in China that she hopes will lift sales, including a small Chevrolet sport-utility vehicle called the Trailblazer and a large SUV, the Cadillac XT6.

She said the auto maker hadn't detected any negative sentiment from consumers related to the U.S.-China trade tensions. Through the first three quarters of 2019, GM earned about $893 million from China, nearly half of the $1.7 billion it earned in the same period a year earlier.

Luxury brands have generally performed well despite the market downturn, and in 2019, sales of GM's upscale Cadillac brand reached a record high of 213,717 units in China, a 3.9% increase from 2018.

Many industry experts said the auto market decline would continue this year. The CAAM estimates the market will fall by 2 percent in 2020.

Yin Yijun in Shanghai and Mike Colias in Detroit

(END) Dow Jones Newswires

January 07, 2020 06:40 ET (11:40 GMT)

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